Daly Grove is one of the 27 neighbourhoods that make up Mill Woods and part of the three-neighbourhood community of Southwood. The Mill Woods land bank was assembled in 1970 by the Government of Alberta because of concern over the rising cost of serviced residential land in the Edmonton area. 
Mill Woods was named for Mill Creek, which crossed it, and the groves of Parkland forest trees that stood there.

By 1971, a development plan had been prepared by the City of Edmonton. The
 city began to purchase the land, subdivide it, and sell residential and commercial building lots. While residential development in Daly Grove began in 1978, the majority of houses, row housing, and apartment buildings were constructed during the 1980s. Daly Grove is bounded by arterial and collector roadways: between 23rd Avenue and 16A Avenue, and between 34th Street and Mill Woods Road East.

The neighbourhood focus is a multi-purpose recreational and open space site. Developed and designated sites for high-density housing are located along collector roadways. The design objective is to provide for an efficient flow of traffic to and from the neighbourhood while minimizing the disruptive and hazardous effects of traffic.

Residents of Daly Grove are served by the businesses in the Daly Grove Shopping Centre, as well as the health services, commercial, recreational, and educational facilities of the nearby Mill Woods Town Centre. Daly Grove Park is located next to the elementary school. The Southwood Community League, formed in 1980, includes the neighbourhoods of Daly Grove, Crawford Plains, and Pollard Meadows.

The neighbourhood was named in honour of Thomas Daly (1861–1908), who was responsible for the development of high-quality strains of wheat and oats. Thomas won first prize for his Alberta-grown oats at the Chicago World’s Fair in 1893. He helped organize the Clover Bar School and municipality, was a member of the Edmonton Exhibition Association, and served on City Council in 1907.