Farwell, the county seat of Parmer County, is at the junction of U.S. highways 60 and 84, on the New Mexico state line in the southwestern part of the county. The townsite was located at the point where the Pecos Valley and Northern Texas Railway entered New Mexico, on land originally part of the XIT Ranch. R. H. Kemp established a lumber company nearby in 1904. The site, named for the brothers Charles B. and John V. Farwell, who headed the Capitol Syndicate, was surveyed in 1905. Farwell was made headquarters for the company's resident representative, James D. Hamlin, and its land commissioner, F. W. Wilsey. Almost immediately several substantial buildings were constructed: a large brick warehouse for R. C. Hopping and the Robertson brothers, who operated a grocery store in Texico; a group of brick stores and offices known as the "Hamlin Brick"; and later the Farwell Inn, a three-story brick hotel. A Congregational church built in 1907 doubled as a public school until separate facilities were built in 1910. A post office was established in 1906. Farwell supplanted Parmerton as county seat when Parmer County was organized in 1907; Hamlin was elected county judge. In 1908 the First National Bank of Farwell was chartered, and the Santa Fe Railroad established a freight depot, warehouse, and coalyard on the Texas side. B. F. Fears started publication of the State Line Tribune by 1910, when Farwell's population had grown to more than 800 and the town had begun to rival Texico and Clovis, New Mexico, as a railroad shipping center. The citizens had voted to incorporate in 1907, but Farwell was disincorporated and the bank closed in 1910 when city funds became badly depleted. The bank was rechartered in 1912 as the Texas State Bank of Farwell.
Farwell grew while real estate developers continued to parcel off XIT lands and attract more settlers. A permanent courthouse was erected in 1917. That year C. A. Roberson sought to establish an automobile and tire manufacturing plant, but that scheme folded when he was jailed for selling fraudulent stock. By the mid-1920s the town had modern utilities, and further improvements were made on the waterworks by 1930. In 1950, with a population of 1,250, the town voted once again to incorporate and established a mayor-commission government. A medical clinic was built in 1955, and a year later a volunteer fire department was organized. The last thirty-nine acres of XIT Ranch land in Farwell was sold in 1963.
The industries that serve modern agriculture in Farwell include a fertilizer plant, an irrigation pipe plant, several feedlot operations, and four grain elevators with a total storage capacity of more than six million bushels. The town has five churches. By 1960 the population was just over 1,000, and by 1967 Farwell supported more than ninety businesses. The annual Border Town Days is held the last weekend in July. The population in Farwell increased from 1,185 in 1970 to 1,354 by 1985 and 1,373 by 1990. In 2000 the population was 1,364.