East Dallas occupies an area in the city of Dallas bounded by Central Expressway to the west, Mockingbird Lane to the north, Loop 12 to the east, and Fair Park to the south. The Beeman family settled there in the 1860s, but only in 1872 did William H. Gaston begin promoting the forty-acre tract east of the city. Only four families settled there at the time, but with the coming of the railroads in 1872–73, a number of floaters came to work on the railroad and set up houses in the undeveloped area between Dallas and East Dallas. Gaston persuaded the railroads to go through East Dallas by giving them $5,000 and free right-of-way through his property. The Houston and Texas Central arrived at the Union Depot in East Dallas on July 16, 1872, and the Texas and Pacific on February 22, 1873. In the 1870s East Dallas became a popular recreation destination on the streetcar lines that ran from Dallas to the state fairs and the horse-racing track.
On September 9, 1882, East Dallas was incorporated on a site of 1,400 acres. Some residents believed the town should be called Gaston rather than East Dallas. The town had an aldermanic form of government. The next year it passed a tax ordinance that raised money for city services. East Dallas was considered the most luxurious place to live in Dallas County; 90 per cent of its houses had running water pumped from deep wells by 1889. The main thoroughfares were well maintained, and a speed limit of eighteen miles an hour was set to slow down swift horses. The first schools were built in 1883 for 400 white students and sixty black ones. In 1886 the first all-brick schoolhouse in Dallas County was built in East Dallas. In 1887 another boom occurred in East Dallas when the Texas State Fair and Dallas Exposition at Fair Park opened (see STATE FAIR OF TEXAS). In the late 1880s East Dallas reached a population of 6,000.
In 1889 state senator R. S. Kimbrough sponsored a bill to remove the charter of East Dallas so it could become part of Dallas. Some claimed that those who revoked the charter did so to make Dallas the largest town in Texas; according to the 1890 census, they were successful. Under the new charter of East Dallas, the city of Dallas took over all the debt of East Dallas in addition to its streets, schools, and public buildings. On December 31, 1889, the day before East Dallas officially became part of Dallas, the city council of East Dallas passed $45,000 in street improvements, which Dallas was forced to finance.