Our church was founded in the summer of 1981 by a small group of dedicated Lutherans, with  the assistance of the late pastor Arthur W. Meyer and the Tidewater Council of Lutheran Churches, looking for a place to practice their faith on the Outer Banks. Their first service was held on June 14.

Later a circus tent was erected at milepost 13 1/2 with various pastors and chaplains from the Tidewater area conducting the services. In September, when the circus tent was taken down, St. Andrew's Episcopal Church, across the way, offered their building to continue our services. The first service was held there on Reformation Sunday, November 1. We are continually grateful to our Christian brothers and sisters of St. Andrew's for permitting us the use of their beautiful sanctuary. Pastors Aldon Purdham, John Hannah, and Russell Siler were outstanding in offering their services during the beginning years of Grace Lutheran Church By-The-Sea. We were also blessed by the assistance of other pastors who served when needed.