In the 1880s, the community was named for a Tacoma, Washington businessman who donated the materials to construct a schoolhouse for the community. Joseph W. Purdy was a grocer by trade. The land upon which the school was built was donated by Horace Knapp. The modern-day Peninsula High School now sits on the hill where this original schoolhouse was built.
The area was settled in the 1880s. Isaac Hawk purchased the land from the Washington Territorial Government. Horace Knapp purchased 19 acres of this land from Hawk in 1884 for the price of $23.75. These acres were made into the town of Purdy (with lots and blocks).
In 1885, Josephine Fuller, the first white woman in the area, married Horace Knapp.
In 1886, the mill in Purdy secured the first contract to provide lumber for nearby Puget Sound Naval Shipyard in Bremerton. This put Purdy on the map. The mill's success also brought conveniences to the area like a grocery store, and a post office. There was a long chute along present-day 144th Street that brought the logs down the hill to the water.
Oysters and clams have been raised in Purdy for decades.
Purdy is the location of the Washington Corrections Center for Women, also known as the Purdy Correctional Center.