From the early 1850s until the 1880s, Mountain City was a sprawling community on the old Stagecoach Road that served as an important hub in the ranching and farming industries of the newly formed Hays County.

The first settlers, such as Chattanooga native Phillip Allen and his family, landed in Mountain City around the time of the Texas Revolution in 1835 and 1836.

Allen had acquired more than 4,600 acres (19 km2) of land in what would become northern Hays County from Ben Milam's colony grant from the Republic of Texas.

Just after the Texas Revolution, Bunton returned to Tennessee to marry his sweetheart, and brought back with him a company of 140 settlers for the new frontier.

But while traveling by steamer from New Orleans to Texas, their ship was captured by a Mexican man of war and the party was imprisoned in Mexico city for three days.

After their release, the Buntons continued on to Mountain City, where they built their "Rancho Rambolette" and began to farm and raise a family.

By the 1850s, the small farming and ranching community was starting to thrive, with schools, churches, businesses, mills and gins.

The civil war era saw a population boom, and many young men of Mountain City served in the 32nd Cavalry regiment under Col. P.C.

For isolated communities at the mercy of the slow stagecoach line for communication with the world at large, the railroad was truly a life-changing development, bringing mail service, trade, and connections with the bustling cities of Austin and San Antonio.

The Kyle family deeded 200 acres (0.81 km2) to the International-Great Northern Railroad, securing their place in history as founders of a town that would bear their name.

As the fledgling railroad towns of Buda and Kyle sprang to life in the early 1880s, the residents of Mountain City began their exodus.