Alanreed is on Interstate Highway 40 and U.S. Highway 66 in southern Gray County. In the early 1880s a group of farmers clearing timber from the basin of McClellan Creek selected the site, which was on the stage line from Mobeetie to Clarendon. By 1884 the Clarendon Land and Cattle Company began selling townsite lots. F. R. McCraken and R. P. Reeves were among the first settlers. In 1886 a post office called Eldridge was established six miles north of the present site of Alanreed. At various times the town was also called Springtown or Spring Tank, for a large spring-fed tank; Prairie Dog Town, for one located nearby; and Gouge Eye, for a saloon fight. The present townsite was laid out in 1900 by a surveyor for the Choctaw, Oklahoma and Texas Railroad. The town's present name was reputedly derived from the name of the contracting firm, Alan and Reed.
In 1901 the first school was built. In 1902 the post office was moved from Eldridge and renamed Alanreed. After the Rock Island line was completed in 1903 the town became a shipping point for cattle. G. E. Castleberry's land company sold parcels at $2.25 an acre. By 1904 Alanreed was the largest town in Gray County. In 1907 it had a bank, a hotel, a depot, Baptist and Methodist churches, a saloon, two grocery stores, a hardware store, a livery stable, and a blacksmith shop. Watermelons became a major crop; the town shipped an average of 500 cars annually. In 1912 a two-story school was built. By 1917 the town had telephone service and an estimated population of 250.
Like its neighbor McLean, Alanreed made several unsuccessful bids to be the county seat. The oil boom of the 1920s led to a temporary increase in population, but it also shifted development to other towns in the area. Although the population was estimated at 500 in 1927, by 1929 both the hotel and the bank had closed. In 1930 the Alanreed school was consolidated with three other area schools. In 1933 the number of residents was estimated at 150. By 1939 the population had grown to 200, and fifteen businesses were reported. In 1947 Alanreed reported eleven businesses and a population of 300. In the early 1960s the Alanreed school district merged with that of McLean, and a new school was built in 1964. The town reported a population of 200 and five businesses in 1967, but over the next decade both continued to decline. In 1977 the population was estimated at sixty, and no businesses were reported. In 2001 the community had an estimated fifty-two inhabitants, a Baptist church, a gas station, a motel and gift shop, and a post office.