[4] It is commonly associated with being named after the Spanish explorer Ponce de León, but the town is actually named for its location on the Leon River (de León in Spanish), which flows directly north and east of the community, and drains into nearby Proctor Lake.

The town was laid out in April 1881 by surveying crews of the Texas Central Railway as part of the historic Missouri-Kansas-Texas Railroad (KATY) as it constructed a line from Ross just north of the Waco area, to Stamford, with the ultimate goal of extending the line to Colorado.

[5]: 415  De Leon then became the center point for the Katy between Waco, Albany, and Cross Plains, thereby relocating numerous railroad crew members and their families to the city.

On Labor Day night 1918, oil was discovered north of De Leon just inside the Comanche County line near Desdemona.

During the next two years, nearly 1000 wells were drilled in the area, and the population of De Leon rose to an estimate of more than 5,000 people.

Cotton soon became the primary crop, as immigrants from the Southern states, and in particular the area around Oxford and Pontotoc, Mississippi, came to the De Leon vicinity, starting in 1890.

Celebrated during the first full week in August, it draws thousands to its numerous events, including a carnival, tractor pulls, car show, and a free cold watermelon slicing.

Among De Leon's unique events is the only paid appearance by Elvis Presley in which he sang only gospel music.

[citation needed] Included among De Leon's most distinguished citizens are former Texas Speaker of the House and later Lieutenant Governor Ben Barnes, a protégé of John B. Connally and Lyndon B. Johnson, and the 1955 Pulitzer Prize winner William White, whose The Taft Story focuses upon Republican presidential contender Robert A. Taft.

Winston Lee Moore, composer and singer of "Don't Let the Stars Get in Your Eyes", was reared just north of De Leon.

Former State Representative Sid Miller was born in De Leon in 1955; he was a candidate for Texas Agriculture Commissioner in the Republican primary election scheduled for March 4, 2014.

According to Campbell's family tradition, his three brothers and he were the men who actually captured Lopez de Santa Anna the day following the battle.

[6] According to the United States Census Bureau, the city has a total area of 2.1 square miles (5.4 km2), all land.