Formerly known as Whitlock, the community’s main thoroughfare was originally named Bay Terrace Avenue; however, by the late 1940s the word “Avenue” had been dropped and the street’s name became simply Bay Terrace. The vicinity around the street was largely undeveloped until the late 1950s, when single-family home construction began there; the area itself then acquired the name of Bay Terrace, which may refer to its flat, ramp like terrain, which gradually slopes downward to the east until reaching the Lower New York Bay in Great Kills Park.
In the 1970s many Jewish families from Brooklyn and Queens settled in Bay Terrace, providing a significant demographic contrast with the surrounding communities, whose populations are largely Italian-American. In recent years, many new commercial establishments — most notably a large shopping center built on the site of a former swim club — have sprung up to serve the area’s growing population. Part of Oceanview Cemetery, originally established by the Lutheran Church but open to those of all faiths, is considered to be in Bay Terrace, which is regarded by many Staten Island geographers as the southernmost neighborhood of the East Shore, the South Shore beginning with Great Kills, which lies immediately to the south.