Clay City is a town in Harrison Township, Clay County, Indiana, United States. The population was 861 at the 2010 census. It is part of the Terre Haute Metropolitan Statistical Area. Clay City was originally called Markland, and under this latter name was platted in 1873 when the railroad was extended to that point. However, there was another post office w…Clay City is a town in Harrison Township, Clay County, Indiana, United States. The population was 861 at the 2010 census. It is part of the Terre Haute Metropolitan Statistical Area. Clay City was originally called Markland, and under this latter name was platted in 1873 when the railroad was extended to that point. However, there was another post office with that name in the state, so this name could not be used because there was already an extant "Markland, Indiana." The name Huntersville was then adopted in honor of Congressman Morton C. Hunter. The Congressman was not popular in the local area, however, so residents objected to the name, and the name "Clay City" was eventually chosen by a local committee. Clay City is named for Kentucky statesman Henry Clay.