Spanish explorers passed this way several times in the centuries preceding Anglo settlement of the area. The original village that would become Hondo was situated on "El Arroyo Hondo," named by the Spanish.
Permanent settlers to the area began arriving with Henri Castro in the 1840s. The Galveston, Harrisburg and San Antonio (GH & SA) railroad began to consider the busy village on Hondo Creek for the location of a depot in the late 19th Century. They ultimately chose 188 acres five miles west of the town. The first deeds were executed in 1881.
A post office for Hondo City was approved in 1882. Knowing that the county seat might be moved from Castroville to a more central location, The GH & SA donated land for a courthouse in 1883. The county seat was relocated to Hondo City in 1892. In the early 20th Century the town, by then known simply as Hondo, developed as a trade center and cotton shipping point. Oil was discovered in the area in the 1920s. The population grew steadily with commerce; by 1940 it reached 2,500.
The town's population exploded in 1942 when an Army Air Corps base was built to the northwest. Hondo was incorporated that year and the Federal Government provided educational funds and installed a sewage system to accommodate the boom. At its peak Hondo had an estimated population of 12,000. The base was closed in 1946, but continued to operate as a civilian pilot training center through the 1950s.
Hondo grew steadily in the late 20th Century. Its population in 1998 was more than 8,000. The community continues to thrive.