Dixie is on U.S. Highway 377 sixteen miles northwest of Sherman in west central Grayson County. The community developed shortly after the Civil War, when a group of Confederate veterans settled at the site and called it Theodore. It soon became a community center for area farmers. By 1886 the name had been changed to Dixie, and the community had acquired a post office, which it retained until 1902. In 1908 the settlement had three churches, a store, a gin, and a school. The school was consolidated with the Whitesboro district in the 1940s. A blacksmith shop continued in operation until about 1965. In the late 1970s the Missionary Baptist and Primitive Baptist churches were still active in Dixie, which reported a population of fifty in 1933 and twenty-five from 1936 through 1990. In 2000 the population was seventeen.