Terry was the son of Samuel and Huldah Terry, born in East Windsor, Connecticut and began his career as an apprentice under Daniel Burnap ("the forerunner of manufacturing"). It is also likely that he received limited instruction from Timothy Cheney, a clockmaker in East Hartford. Cheney specialized in the making of wooden clocks, which was fairly unusual at the time. The use of wooden components would show great influence in Terry's later career.
Terry's apprenticeship to Burnap ended in 1792, and he quickly established himself as both a clockmaker and a repairer of watches in East Windsor. His earliest clocks were fitted with silvered brass dials, which were engraved for him by Burnap. The movements of the clock were made of brass or wood, depending on the requests of his customers. Brass was more commonly used for movements, but it was also considerably more expensive and difficult to work with. Terry moved to Northbury, Connecticut where he continued his business on a smaller scale for several years. In 1801, Terry was granted a patent on an equation clock. This was the first patent for a clock mechanism that was ever granted by the United States Patent Office.
In the year 1806, Terry signed a contract to produce 4,000 wooden clock movements (other shops would make the cases). According to historian Diana Muir writing in Reflections in Bullough's Pond, at that time a skilled craftsman could produce six or ten clocks a year. Muir writes that Terry spent the first two years of the contract inventing and perfecting machinery that could turn clock wheels with enough precision to require relatively little shaping by skilled craftsmen. In the third year he produced 3,000 wooden clocks. He sold his manufactory to two of his assistants Seth Thomas and Silas Hoadley and retreated to his workshop to create the first machine in the world to be mass-produced using interchangeable parts.
According to Muir, Terry designed a new kind of clock, intended for mass production from machine-made parts that would come from water-powered machines ready to go into clocks without any additional cutting by skilled workmen. Terry's great innovation was the design of an escapement and verge adjustable by a skilled craftsman to allow for the slight differences in the mass-produced wooden clock wheels.
The mass produced wooden clocks manufactured from interchangeable parts that poured from Terry's factory beginning in 1816 were the world's first mass produced machines made of moving parts. They were also the first mass market complete machine to be offered to American consumers, or consumers anywhere on this planet. Terry's first clocks were offered in plain wooden box cases. Terry is also credited with the design of the pillar and scroll case for which he also received a patent. In his autobiography, History of the American Clock Business for the Past Sixty Years and Life of Chauncey Jerome Terry's employee and assistant Chauncey Jerome, later a great clock maker and owner of the world's largest clock factory, mentions building the first pillar and scroll in Terry's workshop with the master's design and under his direction. The pillar and scroll case provided a large, clear dial in a wooden case about three feet tall and six inches deep. The upper part was the clock face, the lower part was either a mirror or a picture back-painted on glass. Despite the small size of the clocks compared with traditional long case clocks, Terry was able to provide sufficient power through gearing for the clock to run a full thirty hours before it needed to be rewound. Anticipating a successful product Terry had the foresight to patent his arrangement of clockworks. At least five patents were issued to him through the years up to 1825 in order to protect his invention.
According to Diana Muir in Reflections in Bullough's Pond, within a few years, several hundred men worked in two dozen factories in the Naugatuck Valley producing virtually identical Terry-style thirty-hour wooden clocks. Salesmen innovated such now-familiar marketing devices as installment-plan purchases and model changes of the cases to induce consumers who already owned a functional clock to buy a more fashionable model.
As noted Terry was granted many patents for his advances in clock making, most of which were immediately infringed upon by local competitors eager to participate in satisfying the demand for an affordable clock. Many competitors would note "patent clocks" on their label in order to prevent litigation. One lawsuit did develop as noted below.
Terry also produced wooden-movement tower clocks, such as those found in the steeples of churches and meeting houses, one of which is still operational today in the town of Plymouth.
His achievements place him in an unusual position in the history of clockmaking, leaving him as one of the last of the clock craftsmen, but also as the first of the true manufacturers. His shop represents one of the last Connecticut clock shops (of which there were many) in which there was both pride in workmanship and a high level of personal skill and aptitude.
Terry's brother Samuel (1774-1853) was also involved in the production of wooden-movement clocks, and for several years he worked as Eli's partner, manufacturing improved pillar and scroll clocks after his brother's design.
Most of Terry's sons also became clock makers. His son Eli Terry Jr. was the most famous, as the village of Terryville in Plymouth, Connecticut was named after him; he purchased the lock making equipment that would eventually be used to form Eagle Lock Company, which for a long period of time was Terryville's biggest employeer.
His son Andrew Terry began a very successful malleable iron foundry that later became OZ/Gedney, which has since moved to Mexico. That business was in operation for more than 150 years just down the stream from Andrew's brother Silas's clock shop.
Silas had many financal difficulties in his time, but was eventually a founding member of the Terry Clock Company.
As an example of the frenzy at the time to copy Terry's designs, in the 1820's Reeves's & Co. made clocks in the United States to the Eli Terry design. These clocks faithfully copied the scrollwork and wooden movement of the original Eli Terry clocks. However, since the designs of these clocks were infringements of the Terry patents, Reeves's & Co. were forced out of business and were also forced to destroy their stock of unsold clocks. Very few genuine Reeves's & Co. clocks still exist. One excellent example of an operating Reeves's & Co. mantle clock, built to the Eli Terry design, is in the Basmajian clock collection, in Altadena, CA. Due to its rarity is is extremely valuable.