The first Grace Church was established in 1809 and until 1845 members worshipped at the corner of Broadway and Rector Streets. It quickly became a "fashionable" church, and its pews were much in demand. By the time of the rectorate of Thomas House Taylor (1834-1867), however, its congregation had largely moved uptown. It was then decided that no time should be lost in finding a more convenient site for Grace parishioners.

The land on which the present church stands was purchased from the Brevoort family and on October 30, 1843, the cornerstone was laid. The commission to build the church was awarded to James Renwick, Jr., a young man of 23. This was actually his first church design. He had never seen the great medieval Gothic cathedrals which he had studied, but he admired them so much that he emulated them in Grace Church.

Renwick later went on to design such landmarks as St. Patrick's Cathedral and the Smithsonian Castle. The new sanctuary was consecrated in 1846 and gradually stained glass windows, memorials, and other buildings were added making it the institution it is today.

Grace Church is a national, state and city historic landmark. And is also one of seven New York City buildings designated by the Municipal Art Society as being of national importance, to be preserved at all costs. The church is currently engaged in a preservation effort, focused primarily on restoration of its spire, the priceless 19th century stained glass windows, and the stonework surrounding them.