President Ben Howard was busy in the off season making improvements in the league operation. He visited Jackson, Mississippi, where he looked over aspiring umpires attending the McGowen-Barr school. One of the people he met there was Bob Feller, ace of the Cleveland Indians. Feller, as a favor to McGowen, a former American League umpire, was there to throw a few pitches, and give the evaluators a chance to determine if the students could see a big league fast ball well enough to call it. Other league changes included establishing a bonus pool for the teams finishing in the league's top four places. The money came from a one cent per ticket levied on each paid adult admission. It would be forwarded to league headquarters and divided at the end of the season. The split season was again adopted as a playoff forum over the Schaunessey system.

The closest the Union City fans could get to a major league game was a scheduled exhibition between Doc Protho's Philadelphia Phillies and the Philadelphia Athletics scheduled for Mayfield on April 25. After a record number of tickets were sold, many in the Union City/Fulton area, the game was canceled because of cold weather. The major league season was scheduled to get underway on the 26th, so there was no makeup date.

Three of the Kitty League teams in 1940 were managed by former major league catchers. Benny Tate, back with the Mayfield Browns, played on Chicago and Washington clubs. Hugh Wise, the Owensboro mentor was a former catcher with the New York Yankees and the Cleveland Indians. Mickey O'Neill recently signed by Jackson saw duty with the Cleveland team for a few years. Fulton named Jim Poole, a first baseman with Philadelphia and Brooklyn, to head their team. Poole had recently hit 40 homers for the Memphis Chicks. Veteran Rip Fanning moved to Paducah as manager. He was the only person to survive every season since the 1935 restart of the league. He had a winning record each year. Dutch Welsh piloted the Hopkinsville entry, and Mike Powers was the new man in Bowling Green. Only Union City was without a selected manager by mid-April 1940.

Umpires signed by President Howard included holdovers John Jolly and Darrell Moore from the previous year, along with newcomers Milton Sheilds, a Brooklyn sportswriter; Henry Obetz, Manheim, Pennsylvania; Jim Vimnari, Flint, Michigan; Omar Kelly, Algona, Iowa; Cliff Jambean, Detroit; Hal Van Antwerp, Elkhart, Indiana; Ray Alden, Gilman, Iowa; and Joe Roach, Du Quoin, Illinois. Improvements were made around the league including a new park in Hopkinsville. The old park, Mercer Park, was a disaster for the players and the owners. It was located in a natural amphitheater, surrounded on three sides by stone cliffs. The infield was raised in relation to the outfield causing all plays from the outfield to be made "uphill". Generally there were more fans perched on the surrounding cliffs, than there were paying to come through the gates. The inadequateness of the playing facility had caused more than one higher level agreement to fail. An exhibition game between the Yankees and Dodgers was played in Owensboro. The Brooklyn team beat the Yankees 10-6, and the stars appearing included Pee Wee Reese and Joe Dimaggio. Since the Hopkinsville team was affiliated with Brooklyn it is likely the game would have been played there except for the limits of Mercer Park. The Greyhound management reduced the price of season box seats from the previous year's $5, to $3.50. One reason for the higher price in 1939 was the major league exhibition of the Cardinals had been included in that price. Puppy tickets, covering all home games, were offered for one dollar to all children up to age 14. Advertising was sold for the first time to be placed on the scorecards given away at each game. Books of tickets could also be purchased containing 22 tickets for $5, or 44 tickets for $10. These tickets made waiting at the box-office unnecessary, and as a bonus they were transferable to another party. Over in Fulton, the merchants chipped in $1800 to get their team started for the year.

In a surprise move, the Cardinals picked Charlie Martin a young catcher from the 1939 team to manage the Greyhounds in 1940. Martin joined the Hounds at mid season in 1939 and played excellent ball for the remainder of the year. He had one year in the Bi-State League, two years play in the Florida State League, one year in the Mid-Atlantic, and half of the previous season in the Sally League, before coming to Union City. Under league rules Martin had to carry 4 rookies, not more than 3 classmen, and not more than 8 non-classmen. For purposes of determining experience, 45 days in organized baseball equaled one year.

In 1940 the centerfield fence was moved in some 100 feet. Following this change the dimensions of the field were 312 down the right field foul line and 341 down the left field line. Dead away centerfield was 409 from homeplate. The rightcenter slot was 424 feet deep and the left centerfield alley was 437 feet away. It was still one of the most spacious parks in America. Moving the fence in left the flagpole outside the park. It was brought in later years.

The team members on opening day were Walt Ledbetter, catcher; Stan Wozniak, Mike Sacovich, Mel Simpson, Dick Bost, and Johnnie Hovanec, infielders; Dan Smith, Homer Johnston, Jamie Cookson, Bill Gregor, and Sid Ray, outfielders; and pitchers, Leland Walker, Lloyd Fisher, Robert Maren, Averill Spohn, Cliff Bryan, and Alex Downouk. Cecil Moss was again president of the club committee. R. E. Rankin served as vice president, John Semones, as secretary/treasurer, and Morgan Sedberry was business manager. The Greyhounds won in Fulton, 7-5 in the first game of the year. They followed the next night with another victory at home before a crowd of 1200. Ben Howard showed that he intended to follow and enforce the rules, when he caused Bowling Green to forfeit their first victory for using four class men.

At the end of May Union City was only one game out of first place following Jackson. Cookson was hitting .402, the team, .283, and attendance was high. By mid June the Hounds had a 16 home game winning streak and were tied for first. Then hobbled by injuries the team suffered five straight losses. Ellis Kinder rejoined the Jackson Generals and Sterling Arnold signed with Union City. July 4, saw the Jackson team in first by two games and winning the right to host the all-star game. The All Stars beat the Generals 16-4. Cookson was selected as a Union City representative, but he pulled a ligament and was replaced by Mike Sakovich, a third baseman. Pitcher Averill Spohn was also on the all star team. The split season ended on July 9, with the first half standings as follows: Jackson 38-25, Paducah 36-28, Bowling green 33-29, Union City 34-29, Mayfield 30-33, Owensboro 30-33, Fulton 30-33, and Hopkinsville 21-43.

Ellis Kinder, the Jackson pitcher did not have his option picked up by the Yankees so he was again on the mound for the Generals. Another future major leaguer was pitching for the Mayfield Browns in 1940. Dave Koslo, real name George Bernard Kosloswski, would go to the New York Giants at the end of the 1941 season, and except for duty during WWII would be in the majors for 12 years. He would pitch in 348 games and have a won/loss record of 92-107. He was one of the best pitchers ever to perform in the Kitty League.

The Greyhounds meanwhile, were playing .500 ball until the end of August, when a 1-0 loss to Ellis Kinder and the Jackson Generals sent the team back to second division. The second half of the season ended with Union City sporting a 25-36 record in sixth place. Still 2500 fans showed up to see the home finale. Despite the few large crowds, the Union City team was losing money. This would be a major bone of contention before the next season kicked off.

The second half winner was Bowling green, but not before Hugh Wise and the Owensboro group filed protests. Wise claimed the teams of Jackson, Hopkinsville and Bowling Green joined forces to prevent Owensboro winning the opportunity to meet Jackson in the playoffs. According to Wise this was evidenced by these teams using outfielders as pitchers when playing Bowling Green, so they might save their ace pitchers for the Owensboro contests. The Oilers had seven three hundred hitters and using the money of team owner J. C. Miller, had managed to buy, sell, and trade for talent equal to a class B team. Unfortunately to many stars caused the group to lack the teamwork necessary to win. At least that was the opinion of many league followers, and the league president found no merit to the protest. Bowling Green and Jackson entered the playoffs, and Jackson prevailed to win the series 4-3 after coming back from a 3-1 deficit. Jackson was without the services of their star Ellis Kinder, as his option was again sold to the Yankees, this time for $5000, and he was sent to Binghampton, New York, to end the season.

The league drew a total of 175,000 fans in 1940. Owensboro drew the most with 30,900, while Union City was second with 28,800. Hopkinsville drew 12,000 for the lowest number at the gate. Jackson, the league champion, drew only 18,000 for a sixth place finish in total attendance.

World affairs would have a significant influence on the season of 1941. Some feared there would be no season, because of the passage of the Conscription Act. However the draft was not scheduled to start until January 1, 1941, and it was aimed at young men age 21. Most of the players in the Kitty were age 17-19. Shelby Peace was elected to the league presidency for the 1941 season.