The first lighthouse on this site was built in about 1667 by Sir Robert Reading, and was one of six that Reading had received letters patent to build from Charles II in 1665. The original facility consisted of a small cottage and a square tower which supported a coal-fired beacon. Parts of the original buildings remain. In 1790, the coal beacon was replaced with a set of six Argand oil lamps, each including a silvered copper parabolic and a bulls-eye glass pane. During this period, the lighthouse was maintained by the Revenue Commissioners.
In 1810, the Corporation for Preserving and Improving the Port of Dublin took over the operations. The original building’s location was high on the headland, so the light was often obscured by fog. On December 5, 1811 a recommendation was issued that the lighthouse be moved south on the headland to Little Baily, or Dungriffen. A new tower and house for the keeper, designed by George Halpin Senior, the corporations’s Inspector of Works, was completed on March 17, 1814. The top of the tower stood 134 feet (41 m) above the sea, and the fixed white catoptric light was provided by a set of 24 Argand lamps and reflectors .
The area was the scene of a number of shipwrecks. On August 3, 1846, the City of Dublin Steam Packet Company’s paddle steamer Prince ran into the cliffs about 2½ km north of Baily in heavy fog, and as a result it was decided that fog bells should be installed at the lighthouse. This work was delayed due to costs of other construction projects.
The most notable wreck was the tragedy of the PS Queen Victoria on February 15, 1853, in which over 80 passengers and crew died. The fog bell was finally installed in April, 1853, as a result of the Queen Victoria shipwreck and its subsequent Board of Trade.
In 1865, the light source was improved from catoptric to first order dioptric. At the same time, John Richardson Wigham had patented a gas-burning light, so experiments with this new system were tried at Baily. A gas works was built at the station to produce the fuel, first from oil, then shale, and finally rich cannel coal. The experiments were a success, and the system was added to nine other lighthouses.
An air horn was installed in 1871 for times of fog, which was replaced with a siren in 1879. The bell was kept as a standby system until 1890. The siren was replaced by a diaphone in 1926.
In 1892, two additional homes for Assistant Keepers were built. In 1902, a system was installed that caused the gas light to flash once every 30 seconds, instead of shining continually. In 1908, the gas light was replaced with one using incandescent vaporised paraffin. In 1953, a larger house was built for the Principal Keeper below the lighthouse.