The Island City was built in 1859 as a two-masted schooner by Peter perry at his remote shipyard on Harsens Island, Michigan. The vessel had one deck, a square stern and no figurehead. It was owned equally by Peter Perry and John Babbitt, and Peter Perry was listed as its first Master. It was enrolled at the Port of Detroit on August 15, 1859. During the Island City’s tenure on Lake St. Clair, the ship carried fresh farm products from unimproved ports along Lake St. Clair to the markets of Detroit.

On April 26, 1861, the Island City’s enrollment was surrendered at the Port of Detroit for change of owners. Its new owners were Roswell Green, Daniel Green, and Henry S. Austin, each 1/3 owners of the vessel. The homeport was changed to New Baltimore, Michigan, and Roswell Green took command. Following this, ownership of the ship would continue to change numerous times over the years. The vessel carried primarily lumber to different Wisconsin ports on Lake Michigan.
On the morning of April 7, 1894, the Island City cleared Ludington, Michigan, under the command of Captain William Wood with a load of hardwood bound for Milwaukee. A young crew of William Marsch of St. Joseph, Michigan, and Joseph Rouse of Benoit, Michigan, was aboard. An easterly gale arose when the ship was fourteen miles from Milwaukee harbor. The Island City began to take on water. Water continued to rise in the hold, even as the crew worked continually at the pumps. By nightfall, the storm increased in strength and water pouring in uncontrollably. By 11pm, the three men began preparations for abandoning the schooner in the yawl boat. While cutting the yawl loose, Captain Wood and the yawl were swept into the lake with no oars onboard. The two crew members were stranded in the sinking vessel and were reported as lost with the ship, while the captain managed to climb into the boat and was washed ashore the following afternoon near Mequon, Wisconsin.

The fish tug Barney Catos located the spars of a schooner protruding from the water approximately 12 miles northeast of Milwaukee on April 12, 1894. It was assumed by contemporary news reports that the spars belonged to the Island City.
The wreck of the Island City is located nine miles southeast of Port Washington, Wisconsin and lies in 135 feet of water badly broken up in a concentrated debris field. Most of the outer wooden hull and rigging are present. Commercial fishing nets are snagged on her remains.