Although the town is supported by local businesses and small manufacturing, a growing professional community near the east edge of the village provides the area with a reputation as a good place to live and raise a family. The downtown area boasts a hardware store, restaurants, specialty shops, including a coffee house, and various antiques and arts shops.
Grass Lake was first settled in 1829 by David Sterling, whose family moved here from Niagra County, New York. In 1842, a railroad depot made Grass Lake a permanent community: it remains along the rail line on the eastside of downtown and stands in remarkable original condition as a result of a community wide restoration effort in the early 1990s.
The community sponsors an annual Fourth of July celebration at Grass Lake County Park on the shores of Grass Lake with many activities for visitors and residents alike. Grass Lake was named for the marshy lake on the north side of the village. The village proper became incorporated as a village in 1871.