On November 5, 1960, country music singer Johnny Horton was killed by a drunk driver on Highway 79 near Milano on his way home from a performance at the Skyline Club in Austin, Texas.

One story suggests that the town was simply named after Milan, Italy, because of similarities in the climate, but truly, the climate of Milan in Northern Italy, is cold and continental; another says that the name was supposed to have been "Milam," but the United States Post Office Department either got it wrong or changed it intentionally because another Milam, Texas, already existed.

[5] Nevertheless, when the Gulf, Colorado and Santa Fe Railroad Company built the section of track between Brenham and Belton in 1881, it established the town of Milano Junction at the railway's intersection with the International-Great Northern, about two miles east of Milano.

By the late 1880s, Milano was a commercial hub, with 500 residents, and served as a shipping point for cotton and hides produced in the area.

Truck farming became an important industry for Milano in the 1920s, with tomatoes, watermelon, and cantaloupes as the principal crops.

[5] The small city of Milano reached its population peak in 1939, when approximately 920 residents were reported to be living there.

[5] As of the 2020 United States census, there were 390 people, 229 households, and 174 families residing in the city.