Residents moved their buildings over from the original settlement, now referred to as "Old Houlka", located to the west.

Started around a fur trading post prior to 1794, Old Houlka is the oldest surviving settlement in north Mississippi.

[5] Settlers arrived in the late 1700s and established a Chickasaw Agency House at Houlka for trading with the natives.

[5] Agency representatives called the settlement "Holkey" in their earliest correspondence, which dates from 1794 after the United States gained independence from Great Britain.

During the Civil War, Confederate forces led by General Samuel J. Gholson clashed with Federal troops at a swamp-crossing near Houlka.

In 1904, the Gulf and Ship Island Railroad built a line from New Albany to Pontotoc, passing 1 mi (1.6 km) east of Houlka.

Soon after, residents began moving to "New Houlka", located near the railway line, which had become critical to commerce.

[5][6][10][11] During the mid to late 20th century, railroads restructured and closed many lines, even for freight, because of competition from trucking.

In 2004, the railway running through New Houlka, by then owned by the Mississippi Tennessee Railroad, was abandoned between New Albany and Houston, a distance of 43.2 mi (69.5 km).

[13] According to the United States Census Bureau, the town has a total area of 1.2 square miles (3.2 km2), all land.