In 1869 the Central Pacific Railroad (now Southern Pacific) completed a rail line through the area which is now known as Tracy. The rail line ran from Sacramento through Stockton then over the Altamont Pass and then by ferry service to San Francisco. Shortly after the line was built, a new town sprung up nine miles from Stockton and became known as Lathrop Junction. Lathrop consisted of a roundhouse, railroad shop, yards and hotels for feeding railroad employees. The community became the center of railroad business and the headquarters for the Central Pacific Railroad in the San Joaquin Valley.

The railroad found it necessary to build a coaling station at the base of the Altamont Pass, just fourteen miles to the west of Lathrop. The new station was called Ellis and by 1870 it had about 45 buildings serving the needs of the railroad and its employees and their families.

In 1878 construction of a new rail line was started from Oakland around the shores of San Francisco Bay, through Martinez to connect to the Central Pacific at a point three miles to the east of Ellis. The line had been built to make possible greater efficiency by avoiding hills and to eliminate the expense of helper engines. The result of the new rail line was the founding of Tracy on September 8, 1878, named for Lathrop J. Tracy, a grain merchant and railroad director in Mansfield, Ohio.

Soon after the establishment of the new line connecting in Tracy, the railroad discontinued the coaling station at Ellis and employees and their families were moved to Lathrop and to the new Tracy station. The town of Ellis moved bag and baggage to Tracy including moving two hotels.

Tracy continued to grow as a railroad center. A new line through Los Banos was the fastest and least expensive way to Los Angeles. In March of 1894 railroad headquarters at Lathrop were moved to Tracy. All of the railroad equipment including engines and buildings were moved. Thus, Tracy's beginning is in fact the story of a railroad.

Tracy was incorporated in 1910 and it grew rapidly after the first irrigation district was established in 1915. Although railroad operations began to decline in the 1950s, Tracy continued to prosper as an agricultural area. Today, the City seal reflects this history of railroads and agriculture.