During the early 1900s, plans were made for the construction of the Bartlett and Western Railway to run from Bartlett to Florence. The line was to serve as a feeder to the MK&T (Katy) Railroad, which passed daily through Bartlett. Temple real estate developer Orlando D. Jarrell encouraged railroad executives to direct the route through a portion of property that he leased, rather than through the established town of Corn Hill, situated two miles to the south. Jarrell partnered with E.C. Haeber of Bartlett who provided the capital to purchase the property. Jarrell then platted a townsite and began to sell lots in December 1909. By December 1911, when the railroad finally arrived in Jarrell, most of the residents of Corn Hill had moved to the new town. In fact, between 20 and 25 structures were also moved from Corn Hill to Jarrell.
In 1911, E.M. Wilson, a cotton buyer from Taylor, built a mercantile, bank, and hardware shop in downtown Jarrell. A post office was first opened in the town on March 8, 1912. Jarrell's first school was a frame structure, and a two-story brick building was constructed in 1916. Three cotton gins in Jarrell processed the crop on which the town was so dependent. However, the decline of the cotton industry during the 1920s & 1930s along with the closing of the Bartlett and Western Railway in 1935 resulted in a significant population decline. The town's 1914 peak population of 500 declined to 200 by 1930, but again grew to 350 by 1945.
Jarrell made national news headlines when a May 27, 1997 tornado killed 27 residents and injured many others. The town of Jarrell carried on, incorporated in 2001, and has since experienced rapid population growth.