Hills Prairie was founded in the 1830s by the area's first settlers, Elisha Barton and Edward Jenkins.

In 1833, John Gilmer McGehee visited the town, returning two years later with 140 homesteaders from Georgia and Alabama.

His widow, Sarah, sold 2,220 acres (900 ha) to Abram Wiley (Wylie) Hill who built a home on the land.

[4] Notable businesses include the Hills Prairie Livestock Co., which holds auctions every Wednesday at noon,[5] and The Gas Station (formerly Ryan's Hills Prairie Grocery), a barbecue restaurant housed in the building featured as the Last Chance Gas Station in the film The Texas Chain Saw Massacre.

[6] The Abram Wiley Hill House is listed on the National Register of Historic Places.