Originally part of the George T. Walters Survey, this acreage in the 1840s and '50s belonged to many absentee landowners including Sam Houston. In 1887 John R. Jones, a merchant from nearby Goshen, and his wife Joella platted and developed a town called "Lawn City" (1 mi. NE). Soon a post office was established and the name changed to "Lawndale". When the Texas & New Orleans Railroad bypassed Lawndale in 1900 on its route from Kemp to Athens, it ran through the northern part of the Mason-Eubank Ranch. The owners, Thomas H. Eubank (1859-1952) and rancher-banker G.W. ("Dodge") Mason (1858-1917), set aside one square mile of their holdings for a town. The name "Mabank" was formed by combining the names of the two landowners.
Lawndale families and merchants began moving to Mabank. The town grew rapidly, boasting a park, depot, and stock loading pens. There was a gin, post office, cafe, hotel, and several mercantile businesses. Later, church lots were set aside for Baptist, Methodist and Presbyterian congregations. The Baptist church erected a building for a community house and school.
The economy of the area depended first on farming and later on ranching. The 1966 development of Cedar Creek Lake strengthened the community.