Public water and sanitary sewer service has been in existence in Clayton for over 80 years. The first water supply was two springs on Buzzard Roost Mountain constructed in the early part of the 20th century. Currently the City of Clayton's water system is supplied by surface water from Lake Rabun. The water is then treated at the Clayton-Rabun Water Authority’s Treatment Plant in Lakemont before entering the system. The Lake Rabun Water Treatment Facility was built in 1998 with a treatment capacity of two million gallons per day; the facility is in excellent working order, to date there have been no water quality violations at the facility. Under the Agreement with the Authority, the City of Clayton provides all operation, managerial and technical personnel to operate and maintain the treatment plant. Properly licensed and certified staff is provided 24 hours a day seven days per week.

The City has over 3,000 water customers and provides water service in Clayton and in the unincorporated area surrounding it. Clayton also retails water to the City of Tiger, the City of Mountain City, portions of the City of Dillard, and the Rabun Gap-Nacochee area. Clayton provides most water supply and distribution services for the developed areas of the county except for the cities of Tallulah Falls and Sky Valley. The City of Clayton has over 100 miles of 12”, 10”, 8”, 6” and smaller diameter water mains.

Following the Revolutionary War through a treaty with the Cherokees, Rabun County was created from the Indian lands in 1819. Thorough a series of lottery drawings, the area began to settle shortly there after. Clayton was incorporated in 1823, and a site for the County Courthouse with surrounding streets and blocks was laid out in 1824 on some 67 acres of land. This land was purchased from Solomon beck for $150. The City of Clayton encompassed the area Dividings and the Indian trails became US Highway 441 and Highway 76.