Gruene was originally three miles north of New Braunfels at a crossing on the Guadalupe River in Comal County. In recent decades it has been brought within the city limits of New Braunfels. The community was once a prosperous commercial and supply center for blackland cotton farmers of eastern Comal County. German farmers settled the area in the 1850s, and the town took shape in subsequent years under the name Goodwin Community. In 1872 the Gruene family purchased 6,000 acres north of the Guadalupe River, and in 1878 Henry D. Gruene built a mercantile store to serve the several dozen families sharecropping his family's land. The profitable river-crossing store was also on the stage route between Austin and San Antonio. Gruene provided land for Thorn Hill School and soon added a cotton gin and dance hall to his business concerns. With completion of the International-Great Northern Railroad through Comal County in the 1880s, the community's commercial development accelerated, and it took the name of its leading citizen.
In 1900 Gruene was the banking, ginning, and shipping center for area cotton growers. Its dance hall and saloon became the focus of social activities. By the early 1900s the town was served by the Goodwin post office and by passenger and freight depots for both the International-Great Northern and the Missouri, Kansas and Texas railroads. Gruene began a decline with the boll weevil blight of the 1920s. It is reported that late in that decade the Gruene family's 8,000-acre holdings failed to produce a single bale of cotton. The mercantile store and rail depots were closed with the onset of the Great Depression. As post-World War II highway construction bypassed the community, its decline was completed. An estimated population of seventy-five in the 1930s had dispersed by 1950, leaving the once thriving community a ghost town.
Gruene began a revival in the 1970s with restoration of the nineteenth-century settlement as a center for arts, crafts, and tourism. Within a few years the Gruene Dance Hall-touted as the oldest operating in the state-once again attracted weekend crowds. A live theater company, craft and antique shops, restaurants, a hotel, and a winery occupied historic structures and served tourists attracted by the scenic Guadalupe River. The entire town is on the National Register of Historic Places. Since redevelopment the resident population is estimated at twenty.