Cayuga is at the intersection of U.S. Highway 287 and Farm Road 59, five miles east of the Trinity River in northwestern Anderson County. The area was first settled in the late 1840s. The forerunner of Cayuga was a settlement called Wild Cat Bluff, located a short distance away on the Trinity River, which served as a shipping point for area farmers. Wild Cat Bluff flourished briefly during the heyday of river traffic on the Trinity but began to decline in the early 1870s, when the river became unnavigable. By the 1880s a new settlement began to grow up nearby. A post office was opened in 1894; W. A. Davenport, a native of Cayuga, New York, was the first postmaster. He operated a steam barge on the Trinity River for several years, shipping cotton, cross ties, and staves to Galveston. The earliest church in the area, the Judson Baptist Church, was organized in 1854. The Joppa Holiness Church worshiped in the town from 1899 to 1907; the Freeman Baptist Church was organized in 1910 and held regular services until 1934. The first school in the area was taught by G. W. Tuggle, chief justice of Anderson County. Tuggle and his wife Elizabeth gave a half acre of land near Tuggle Springs for the school on May 7, 1860; the school remained there until the 1880s, when it was moved to the Cayuga-Blackfoot road. In 1922, after a bitter fight, the school was moved to a location just off Farm Road 59.
Cayuga remained a small farming community until 1934, when the Tidewater Oil Company brought in the discovery well of a new field, the J. N. Edens No. 1. Cayuga became a oil boomtown almost overnight, and by 1936 it reported a population of 1,000 and fifteen business. After World War II the oil business began to decline, and the number of residents dropped to 200 by 1952. By 1974 the population was only fifty-six, and the town only had two businesses. The school was closed and moved to Bethel. With the opening of the Richland-Chambers Creek Reservoir in nearby Freestone and Navarro counties and the establishment of four state prison units in the area, the town grew some. In the mid-1970s large lignite reserves were discovered in the area. In 1988 approximately 700 people lived around Cayuga, and the town had several businesses, including the regional offices of two major petroleum companies. The reported population in 1990 was fifty-six. In 2000 the population was 200.