[5] The history of Pensacola began circa 1840, with the establishment of a way station on the old Texas Road at the Cabin Creek Crossing of the Grand River.

Two battles between Union and Confederate forces occurred here, resulting in the destruction of Pensacola.

[6] Greenbrier Joe's son, Richard Martin, reestablished Pensacola in 1896, with a small store and a post office at his home, 3 miles (4.8 km) south of the original location.

[6] In 1909, James Sims Wilson, a settler from Kentucky, established a ranch north of Pensacola and east of Grand River.

He filed the Pensacola townsite plat in the office of the county clerk on April 2, 1912.

Despite failure of the town bank in 1921 and the onset of the Great Depression, the announcement of a new dam project five miles east, there was hope for growth to return.

[6] Pensacola never became more than a small country town supported by farming and cattle ranching.

[6] According to the United States Census Bureau, the town has a total area of 0.1 square miles (0.26 km2), all land.