The town is named after Subiaco Abbey, which is located there, and which donated 80 acres (32 hectares) in the early 20th century for a townsite and railroad connection.

The development of both the abbey and the town were related to the expansion of the Little Rock and Fort Smith Railroad (LR&FS) in the area in the late 19th century.

In 1877, it owned thousands of acres in Arkansas through federal subsidies for railroad development, and wanted to attract German Catholic immigrants to the region as settlers.

[4] The railroad came to an agreement with Abbot Martin Marty, O.S.B., of St. Meinrad Archabbey in Indiana, to grant the abbey land in Logan County to establish a monastery and school to serve the hoped-for settlers.

He needed German-speaking priests to serve the growing numbers of German immigrants in his diocese.

The nearby town of Spierlerville, Arkansas, was the site of the local post office in the region.

The Subiaco Development Company was established to sell related lands to the general public.

Abbot Ignatius Conrad of Subiaco Abbey drove the last spike for the railway connection.

[5] According to the United States Census Bureau, the town has a total area of 1.9 square miles (4.9 km2), all land.

The climate in this area is characterized by hot, humid summers and mild to cool winters.