The area to the northwest of Olde Towne, formerly in the separate town of Potomac, is popularly known as Del Ray, although that name properly belongs to one of many communities (including Hume, Mount Ida, and Saint Elmo's) in that area.[28][29][30][31]

The communities of Del Ray and St. Elmo's originated in early 1894, when developer Charles Wood organized them on a grid pattern of streets running north-south and east-west. Del Ray originally contained six east-west streets and five north-south. All were identical in width, except Mt. Vernon Avenue, which was approximately twenty feet wider. St. Elmo's, a smaller tract, was laid out in a similar pattern, but with only four east-west streets and one running north-south.

By 1900, Del Ray contained approximately 130 persons, and St. Elmo 55. In 1908, the tracts of Del Ray, St. Elmo's, Mt. Ida, and Hume were incorporated into the town of Potomac, which by 1910 had a population of 599; by 1920 it contained 1,000; by 1928 it had 2,355 residents; now more than 20,000 people live in Del Ray.[32]

The 254 acres (1 km²) comprising Del Ray were sold to Charles Wood in 1894 for the sum of $38,900, while St. Elmo, made up of 39 acres (160,000 m2), was purchased for $15,314.

The community, while still diverse, has experienced substantial gentrification[33] since the development of the Potomac Yard Shopping Center in the mid-1990s.[34] It draws tens of thousands of people from around the Washington, D.C. region during its annual Art on the Avenue[35] main street festival the first Saturday in October. New development under way in formerly unused land near Potomac Yard, across US Route 1 from Del Ray, will include condominiums, offices, parks, and a fire station with affordable housing on upper floors.