Before Texas was claimed in the 1500s as a part of the Viceroyalty of New Spain by the Spanish Empire, the Dallas area was inhabited by the Caddo Native Americans. Later, France also claimed the area, but in 1819 the Adams-Onís Treaty made the Red River the northern boundary of New Spain, officially placing Dallas well within Spanish territory.[8] The area remained under Spanish rule until 1821, when Mexico declared independence from Spain and the area became part of the Mexican state of Coahuila y Tejas. In 1836, the Republic of Texas broke off from Mexico to become an independent nation. In 1839, four years into the Republic's existence, Warren Angus Ferris surveyed the area around present-day Dallas. He shot the bears, poisoned the wolves, chased off the natives, and made the area safe for John N. Bryan to "found" the city of Dallas in 1841 . In 1846 the Republic of Texas was annexed by the United States and Dallas County was established.

According to the City of Dallas, the origin of the name “Dallas” is a mystery, despite claims to the contrary. The most probable claim is that George Mifflin Dallas , a Vice President of the United States, was the person after whom Dallas was named. Bryan stated only that it was named “after my friend Dallas.” Another idea, was that the name was influenced from a small town in Pennsylvania, named "Dallas"

Dallas was founded in 1841 and formally incorporated as a city on 2 February 1856. The city had a few slaves, mostly brought by settlers from Alabama and Georgia. Dallas was just another small town dotting the Texas frontier until after the American Civil War in which it was part of the Confederate States of America, and only legally became a city in 1871. The city paid the Houston and Texas Central Railroad US$5,000 to shift its route 20 miles (32 km) to the west and build its north-south tracks through Dallas, rather than through Corsicana as planned.[verification needed] A year later, Dallas leaders could not pay the Texas and Pacific Railroad to locate there, so they devised a way to trick the Railroad. Dallas had a rider attached to a state law which required the railroad to build its tracks through Browder Springs—which turned out to be just south of Main Street.[verification needed] In 1873, the major north-south and east-west Texas railroad routes intersected in Dallas, thus ensuring its future as a commercial center.

By the turn of the twentieth century Dallas was the leading drug, book, jewelry, and wholesale liquor market in the Southwestern United States. It also quickly became the center of trade in cotton, grain, and even buffalo. It was the world's leading inland cotton market, and continued to lead the world in manufacture of saddlery and cotton gin machinery. As it further entered the 20th century, Dallas transformed from an agricultural center to a center of banking, insurance, and other businesses.

In 1930, oil was discovered 100 miles (160 km) east of Dallas and the city quickly became the financial center for the oil industry in Texas and Oklahoma. In 1958 the integrated circuit was invented in Dallas by Jack Kilby of Texas Instruments, which punctuated the Dallas area's development as a center for high-technology manufacturing. During the 1950s and 1960s, Dallas became the nation's third-largest technology center, with the growth of such companies as Ling-Temco-Vought (LTV Corporation) and Texas Instruments. In 1957 two developers, Trammell Crow and John M. Stemmons, opened a Home Furnishings Mart that grew into the Dallas Market Center, the largest wholesale trade complex in the world. On 22 November 1963, President John F. Kennedy was assassinated on Elm Street while his motorcade passed through Dealey Plaza in downtown Dallas.

Dallas's skyline before a late spring afternoon thunderstorm.

In the 1970s and 1980s, Dallas underwent a building boom that produced a distinctive contemporary profile and prominent skyline for downtown Dallas. The 1980s also saw many oil industry companies relocate to Houston in order to be closer to offshore operations and the Port of Houston. However, Dallas was beginning to benefit from a burgeoning technology boom at the same time, driven by the growing computer, microchip, and telecommunications industries. Dallas also remained a strong center of banking, insurance, and business. The mid-to-late 1980s were tumultuous for the city when many Dallas banks collapsed from the Savings and Loan crisis. The hit effectively threw the city's economy to its knees and plans for hundreds of millions of dollars worth of development were scrapped. The city remained in recession during the 1990s but the explosive growth of technology-based businesses kept the city's economy fairly stable—During the 1990s, Dallas became known as the Silicon Prairie, similar to California's Silicon Valley.

Recession continued to plague the city into the early 21st century. From 1988 to 2005, not a single high-rise structure was built within the downtown freeway loop, and the city was running out of developable land in north Dallas and Lake Highlands. Totally hemmed in on the north by suburbs, most new housing was being built in Carrollton, Coppell, Frisco, McKinney, Plano and Richardson. By the mid-2000s, the dried up downtown market began to turn around with the construction of multiple art venues, office towers, residential towers, and residential conversions. Downtown housed little over 1,600 residents in 2000, but by the year 2010, the North Central Texas Council of Governments expects over 10,000 residents to be living in the neighborhood. Just north, Uptown is one of the hottest real estate markets in the country, and major advances are taking place in the underdeveloped south Dallas and Oak Cliff areas, including the construction of the University of North Texas at Dallas.