Bay Head was incorporated as a Borough by an Act of the New Jersey Legislature on June 15, 1886, from portions of Brick Township, based on the results of a referendum held three days earlier.
The community was supposed to have been named "Bayhead," after the Bayhead Land Company that developed the area in the 1870s. A railroad sign posted in the 1880s labeled the station as "Bay Head," and the name stuck when the borough was incorporated in 1886.
As of the census of 2000, there were 1,238 people, 584 households, and 349 families residing in the borough. The population density was 2,094.3 people per square mile (810.2/km²). There were 1,053 housing units at an average density of 1,781.3/sq mi (689.1/km²). The racial makeup of the borough was 97.98% White, 0.16% African American, 0.08% Native American, 0.57% Asian, 0.48% from other races, and 0.73% from two or more races. Hispanic or Latino of any race were 1.29% of the population.
There were 584 households out of which 16.6% had children under the age of 18 living with them, 51.5% were married couples living together, 5.8% had a female householder with no husband present, and 40.1% were non-families. 35.4% of all households were made up of individuals and 14.2% had someone living alone who was 65 years of age or older. The average household size was 2.12 and the average family size was 2.73.
In the borough the population was spread out with 15.4% under the age of 18, 4.0% from 18 to 24, 21.7% from 25 to 44, 33.7% from 45 to 64, and 25.2% who were 65 years of age or older. The median age was 52 years. For every 100 females there were 90.2 males. For every 100 females age 18 and over, there were 88.3 males.
The median income for a household in the borough was $77,790, and the median income for a family was $93,055. Males had a median income of $64,063 versus $38,672 for females. The per capita income for the borough was $49,639. About 0.3% of families and 3.0% of the population were below the poverty line, including 2.8% of those under age 18 and 2.1% of those age 65 or over.
New Jersey Transit trains terminate at the Bay Head station and yard, with service on the North Jersey Coast Line north to Penn Station Newark, Hoboken Terminal, and Penn Station New York in Midtown Manhattan.
The main roadway through Bay Head is Route 35, a two-lane highway that connects many of the Jersey Shore's small communities.