Alvarado, the oldest town in Johnson County, is at the junction of U.S. highways 67 and 81 and Interstate Highway 35W, fifteen miles east of Cleburne in eastern Johnson County. In the winter of 1849 William Balch staked out a claim near an old Indian trail. His family did not last until spring but returned in 1851. Two years later Balch and a fellow settler, G. H. Sigler, laid out half-acre town lots. The community's first sheriff, A. H. Onstoott, is credited with naming Alvarado for Alvaredo, Vera Cruz, Mexico, where he fought in a battle during the Mexican War. By the summer of 1854 Alvarado had an estimated 100 families and postal service. The focus of the town was a two-story building, where the Masonic lodge held its meetings and an elementary school conducted classes. There was also an Alvarado College, operated by John C. Collier. The town had four churches, more than a dozen businesses, and 350 residents.
Residents voted to incorporate in 1878. In 1881 the tracks of the Gulf, Colorado and Santa Fe and the Missouri, Kansas and Texas railroads arrived. Within a few years the population surpassed 1,000. By that time the community had a bank chartered in 1880, a newspaper named the Alvarado Bulletin, two schools, a number of gins, a hotel, and an opera house. By 1890 a second bank opened and the reported population exceeded 2,000.
By the mid-1920s Alvarado had an estimated 1,200 residents and more than fifty businesses. Unlike many of its sister communities, Alvarado did not decline during the Great Depression and World War II, when the town actually managed to grow. The population reached 1,324 in 1943 and 4,129 in 1988, when sixty local businesses were in operation. Proximity to Cleburne and the Dallas-Fort Worth area contributed to the growth. In 1990 the population was 2,918. In 2000 the population grew to 3,288, and that figure increased to 3,785 in 2010.