The original town of Hico was founded in 1856 on Honey Creek, a most picturesque and historical stream that flows into the Bosque River. Hico was named by J.R. Alford, after his old home town of Hico, Kentucky. In 1880 the Texas Central Railroad was built through Hamilton County. Hico was approximately two and one half miles from the railroad. Officials proposed that the town be moved to the railroad.
On November 11, 1880, an auction was held to sell the first lots for the new location of Hico. Soon the only remains of Old Hico were a corn mill and cotton gin. The mill and gin were torn down in 1930, and the rocks from these two buildings were used to build the present school gym and the marker of Old Hico.
The early settlers were faced with many hardships.  There were many Indian raids. Once Indians stole 11 saddle horses. Another incident involving Indians occurred when several men and boys from Hico went on a cow hunt at Blue Ridge, near Hamilton. Some Indians rode up and killed two of the men. The Indians chased the other members of the party. The settlers also had to deal with many cattle thieves.

In the Fall of 1890 there were two disastrous fires. The first destroyed the entire east side of Pecan Street. A few weeks later the west side was also destroyed. The citizens, not daunted saw a vision of a bigger and better Hico, and they immediately began the erection of handsome, commodious structures to replace the older and smaller ones. These made the town assume the proportions and appearance of a magnificent little city.  Shortly after the turn of the century, Hico was buying and shipping more grain than all other towns combined on the Texas Central Railroad. According to early day reports, by 1907, more cotton was bought right off wagons on main street than in any town in the world. By 1908 Hico received 25,000 to 40,000 bales of cotton a year. There were 95 businesses including a candy factory, six hotels, a broom factory and ten grocery stores. Recreation in the early period of Hico included an Opera House, the Palace Theater and a Roller Rink which was located south of the railroad depot under a tent.

As with most small towns, as rural America declined and the railroads started disappearing, Hico also went from a striving town to a small community of farmers and ranchers. Now Hico is once again growing with new business and interest. Although Old Hico and its people are gone now they have left a vivid imprint on the future of Hico. They have set an example for all future generations. They proved that although there are many hardships in life, in order to create something lasting and worthwhile one must learn to stand up and overcome these hardships. The citizens of Hico will continue to always dream of something bigger and better, and will always have pride in their town.