Lexington was named in June 1775, in what was then considered Fincastle County, Virginia, 17 years before Kentucky became a state. A party of frontiersmen, led by William McConnell, camped on the Middle Fork of Elkhorn Creek (now known as Town Branch and rerouted under Vine Street) at the site of the present-day McConnell Springs. Upon hearing of the colonists' victory in the Battles of Lexington and Concord on April 19, 1775, they named the site Lexington. It was the first of many American places to be named after the Massachusetts town.

The town was chartered on May 6, 1782, by an act of the Virginia General Assembly. The First African Baptist Church was founded c. 1790 by Peter Durrett, a Baptist preacher and slave held by Joseph Craig. Durrett helped guide "The Travelling Church", a group migration of several hundred pioneers led by the preacher Lewis Craig and Captain William Ellis from Orange County, Virginia to Kentucky in 1781. It is the oldest black Baptist congregation in Kentucky and the third-oldest in the United States.

In the early 1800s, Lexington was a rising city of the vast territory to the west of the Appalachian Mountains; Josiah Espy described it in a published version of his notes as he toured Ohio and Kentucky:

In the early 19th century, Lexington planter John Wesley Hunt became the first millionaire west of the Alleghenies. Henry Clay, a lawyer who married into one of the wealthiest families of Kentucky and served as Speaker of the United States House of Representatives in 1812, helped to lead the War Hawks, pushing for war with Great Britain to bolster the markets of American products. Six companies of volunteers came from Lexington, with a rope-walk on James Erwin's farm on the Richmond Road used as a recruiting office and barracks until the war ended. Several Lexingtonians served with prominence as officers in the war. For example, Captain Nathaniel G.S. Hart commanded the Lexington Light Infantry (also known as the "Silk Stocking Boys") and was killed while a captive after the Battle of the River Raisin. Henry Clay also served as a negotiator at the Treaty of Ghent in 1814.

The growing town was devastated by a cholera epidemic in 1833, which had spread throughout the waterways of the Mississippi and Ohio valleys: 500 of 7,000 Lexington residents died within two months, including nearly one-third of the congregation of Christ Church Episcopal.London Ferrill, second preacher of First African Baptist, was one of three clergy who stayed in the city to serve the suffering victims.

Farmers in the areas around Lexington held slaves for use as field hands, laborers, artisans, and domestic servants. In the city, slaves worked primarily as domestic servants and artisans, although they also worked with merchants, shippers, and in a wide variety of trades. Farms raised commodity crops of tobacco and hemp, and thoroughbred horse breeding and racing became established in this part of the state. In 1850, one-fifth of the state's population were slaves, and Lexington had the highest concentration of slaves in the entire state. It also had a significant population of free blacks, who were usually of mixed race. By 1850, First African Baptist Church, led by London Ferrill, a free black from Virginia, had a congregation of 1,820 persons, the largest of any, black or white, in the entire state.

Amidst the tensions between black and white populations over the lack of affordable housing in the city, a race riot broke out on September 1, 1917. At the time, the Colored A. & M. Fair (one of the largest African American fairs in the South) on Georgetown Pike had attracted more African Americans from the surrounding area into the city. Also during this time, some United States National Guard troops were camping on the edge of the city. Three troops passed in front of an African American restaurant and shoved some people on the sidewalk. A fight broke out, reinforcements for the troops and civilians both appeared, and soon a riot began. The Kentucky National Guard was summoned, and once the riot had ended, armed soldiers and police patrolled the streets. All other National Guard troops were barred from the city streets until the fair ended.

On February 9, 1920, tensions flared up again, this time over the trial of Will Lockett, a black serial killer who murdered Geneva Hardman, a 10-year-old white girl. When a large mob gathered outside the courthouse where Lockett's trial was underway, Kentucky Governor Edwin P. Morrow massed the National Guard troops into the streets to work alongside local law enforcement. As the mob advanced on the courthouse, the National Guard opened fire, killing six and wounding 50 others. Fearing further retaliation from the mob, Morrow urged the United States Army to provide assistance. Led by Brigadier General Francis C. Marshall, approximately 1,200 federal troops from nearby Camp Zachary Taylor moved into the city the same day to assist National Guard forces and local police in bringing order and peace. Marshall declared martial law in the city and had soldiers positioned throughout the area for two weeks. Lockett was eventually executed on March 11 at the Kentucky State Penitentiary in Eddyville, after being found guilty of murdering Hardman.

In 1935, during the Great Depression, the Addiction Research Center (ARC) was created as a small research unit at the United States Public Health Service hospital in Lexington. Founded as one of the first drug rehabilitation clinics in the nation, the ARC was affiliated with a federal prison. Expanded as the first alcohol and drug rehabilitation hospital in the United States, it was known as "Narco" of Lexington. The hospital was later converted to operate as part of the federal prison system; it is known as the Federal Medical Center, Lexington and serves a variety of health needs for prisoners. Lexington also served as the headquarters for a pack horse library in the late 1930s and early 1940s.

The Lexington-Fayette Metropolitan Statistical Area (MSA) includes Bourbon, Clark, Fayette, Jessamine, Scott, and Woodford Counties. The MSA population in 2015 was estimated at 500,535.

The Lexington-Fayette-Frankfort-Richmond, KY Combined Statistical Area had an estimated population of 723,849 in 2015. This includes the metro area and an additional seven counties.

As of the census of 2010, 295,803 people, 125,752 households, and 62,915 families resided in the city. The population density was 1,042.8 people per square mile (353.5/km²). The 135,160 housing units averaged 408.3/mi² (157.6/km²). The racial makeup of the city was 75.7% White, 14.5% Black or African American, 0.3% Native American, 3.2% Asian, 0.03% Pacific Islander, 1.21% from other races, and 2.5% from two or more races. Hispanic or Latinos of any race were 6.9% of the population.

Of the 125,752 households, 27.3% had children under the age of 18 living with them, 43.5% were married couples living together, 11.5% had a female householder with no husband present, and 41.9% were not families; 31.7% of all households were made up of individuals, and 7.5% had someone living alone who was 65 years of age or older. The average household size was 2.29, and the average family size was 2.90.

In the city, the population was distributed as 21.3% under the age of 18, 14.6% from 18 to 24, 33.2% from 25 to 44, 20.9% from 45 to 64, and 10.0% who were 65 years of age or older. The median age was 33 years. For every 100 females, there were 96.5 males. For every 100 females age 18 and over, there were 94.3 males.

The median income for a household in the city was $49,778 and for a family was $53,264. Males had a median income of $36,166 versus $26,964 for females. The per capita income for the city was $30,031. About 8.2% of families and 18.9% of the population were below the poverty line, including 14.3% of those under the age of 18 and 8.6% of those ages 65 and older.

The table below illustrates the population growth of Fayette County since the first U.S. Census in 1790. Lexington city limits became coterminous with Fayette County in 1974.

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