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It is said that the English Toy Terrier, now known in America as the Toy Manchester Terrier, was developed by a man named John Hulme who, trying to achieve an animal that would combine the strength and tenacity of the Terrier and the speed of the Whippet, crossed the two to produce what was then called the Black-and Tan Terrier. Since the town of Manchester was the center of breeding for this very fast and highly tenacious animal, it was re-named the Manchester in 1874. The name was subsequently changed in The United Kingdom to English Toy Terrier, although it is still known as the Toy Manchester Terrier in The United States. The breed was highly skilled in killing rats, an important task when disease was spread by vermin.

With the advent of dog shows and the founding of The Kennel Club, the breed became more popular as a pet and was eventually bred down in size. By choosing the smallest examples from litters and breeding them with other small examples, fanciers created a new breed now known as the English Toy Terrier, or in America, the Toy Manchester Terrier. Unfortunately, the craze for small dogs became so great that during the late 1880's they became as small as two or three pounds, a development which jeopardized their health.