In 1854, the U.S. government constructed a lighthouse on Half Moon Shoal, opposite of would later become the Texas City Dike. A small village of fishermen, farmers, cattlemen, and lighthouse keepers developed. By 1878, the community was given a post office and named Shoal Point.

In 1893, the Texas City Improvement Company was created by Jacob and Henry Myers and Captain A.B. Wolvin. With the intention of building a port, they platted a new town and the post office changed its name to Texas City. Soon, the Galveston, Houston, & Henderson Railroad linked to the town at a site called Texas City Junction. Improved port facilities, and other businesses followed. In 1908, the first oil refinery began operating, and this industry came to rival the port activities.

During World War I, the Army stationed troops on the outskirts of Texas City because of the possibility of problems arising from the Mexican Revolution. The First Aero Squadron, a predecessor to the Air Force, began training during this time. Many records for speed and distance were set by these early pilots, several of which had airfields and bases named for them.

The Texas City port was also the location for the worst industrial disaster in U.S. history. In 1947, the explosions of the S.S. Grandcamp and S.S. High Flyer caused major damage to the port and the deaths of over 600 people.