As of the 2000 census, the city had a total population of 3,228

According to the United States Census Bureau, the city has a total area of 6.3 km (2.4 mi). 6.3 km (2.4 mi) of it is land and none of it is covered by water.

As of the census of 2000, there were 3,228 people, 1,321 households, and 816 families residing in the city. The population density was 515.0/km (1,334.1/mi). There were 1,377 housing units at an average density of 219.7/km (569.1/mi). The racial makeup of the city was 98.76% White, 0.28% African American, 0.19% Native American, 0.37% Asian, 0.00% Pacific Islander, 0.12% from other races, and 0.28% from two or more races. 0.43% of the population were Hispanic or Latino of any race.

There were 1,321 households out of which 30.7% had children under the age of 18 living with them, 52.9% were married couples living together, 6.5% had a female householder with no husband present, and 38.2% were non-families. 35.0% of all households were made up of individuals and 19.4% had someone living alone who was 65 years of age or older. The average household size was 2.27 and the average family size was 2.97.

In the city the population was spread out with 23.5% under the age of 18, 6.7% from 18 to 24, 25.1% from 25 to 44, 20.0% from 45 to 64, and 24.8% who were 65 years of age or older. The median age was 42 years. For every 100 females there were 84.2 males. For every 100 females age 18 and over, there were 76.5 males.

The median income for a household in the city was $41,275, and the median income for a family was $51,493. Males had a median income of $33,500 versus $21,161 for females. The per capita income for the city was $20,345. 6.4% of the population and 3.9% of families were below the poverty line. 3.7% of those under the age of 18 and 9.0% of those 65 and older were living below the poverty line.

Originally called Fairview, Story City owed its growth, if not its initial settlement to the arrival of the railroad & Norwegian immigrants. Before the Norwegians moved into central Iowa & the Story City vicinity, American settlers had begun to farm in the area by the mid 1850s. They then preferred to live near the Skunk River (then called the Chicaque) because it provided ready access to water & timberland which surrounded its banks.

The Fairview settlement remained small & relatively insignificant until after the Civil War, before then only a few businesses operated, including a saw mill. These outfits lasted only a brief time. George Sowers & Capitain W.A. Wier were the communitys first leaders.

By the 1860s settlement activity quickened. Norwegians who had first come to Illinois from their native country in the 1850s found land in Story County both inexpensive to buy ($1.25 an acre) and profitable to farm. American farmers & merchants followed the Scandinavians.

The Des Moines & Minnesota railroads arrival in 1879 assured a continuous existence for this small town. As in so many towns in Iowa, the railroad proved a vital factor in touching off a local commercial boom, farmers in the area enjoyed the conveniences of delivering their produce to this new depot in preference to the tedious, mud-ridden haul to Ames & Gilbert. The Northwestern, a railroad line running east to west, arrived at the Fariview settlement in 1881.

That same year, 1881, the town incorporated, changed its name to Story City, the town began expanding away from the Skunk River towards the depot. At the time a post office was established, it was discovered that there was already a post office with the name of Fariview. The town was named after eminent jurist Joseph Story, who was, for a third of the century, associate justice of the United States Supreme Court. After this, Story Citys financial activity expanded with the advent of numerous small scale industries and manufacturing works.

Story City's population was composed of a Scandinavian mixture of mainly Norwegians and some Danes. The Norwegians pushed into Iowa not only in quest of cheaper land, but also for the freedom to establish a new Lutheran congregation, in fact, they organized three Lutheran churches. The Norwegians also had a newspaper printed in their native language. Throughout the city's history the Scandinavians have contributed to the city's vitality. Story City has experienced economic growth as a result of its location on Interstate 35.