The town was founded to be the seat of the newly formed Clay Co. in 1807 on a 10-acre (4.0 ha) parcel near the Lower Goose Creek Salt Works. The county court stipulated that the town be named Greenville in honor of the War-of-1812general who gave the county its name. The Greenville in Muhlenberg County had already preëmpted that name, however, and it was changed to "Manchester" in December. There was a local legend in the town that this was in honor of the hometown of Gen. Garrard's second wife Lucy Lees, but Rennick points out that she was born well after the naming of the city. He opines that it is more likely that the local businessmen simply wanted a name evocative of the English industrial success.
As of the census of 2010, there were 1,255 people, 579 households, and 332 families residing in the city. The population density was 836.7 people per square mile (321.8/km²). There were 655 housing units at an average density of 436.7 per square mile (167.9/km²). The racial makeup of the city was 92.5% White, 6.3% African American, 0% Native American, 0.1% Asian, 0.2% from other races, and .09% from two or more races. Hispanic or Latino of any race were 1% of the population.
There were 579 households out of which 23.3% had children under the age of 18 living with them, 33.5% were married couples living together, 19% had a female householder with no husband present, and 42.7% were non-families. 37.8% of all households were made up of individuals and 19.2% had someone living alone who was 65 years of age or older. The average household size was 2.16 and the average family size was 2.84.