Hallsburg is on Farm Road 3222 eleven miles east-southeast of Waco in eastern McLennan County. It was named in honor of W. E. Hall, a doctor with a practice in Waco, who in the 1880s purchased more than 2,000 acres of land west of Mart, where he built a home, a gin, and a blacksmith shop and donated land for a townsite. The International-Great Northern Railroad built through Hallsburg in 1902, when it laid the section of track between Marlin and Waco. A post office was established in May of that year but was discontinued in 1905 and replaced by rural delivery from Waco. The population of Hallsburg was reported at thirty in 1910 and at thirty-five in the 1930s and 1940s. A school and several residences marked the community on county highway maps in the late 1940s.
The railroad abandoned the section of track between Mart and Wardlaw in 1968, thus depriving Hallsburg of rail service, but the completion of Tradinghouse Creek Reservoir that same year provided a boost for the community's economy by attracting visitors and new residents to take advantage of recreational facilities. Residents of the community voted to incorporate in the late 1970s with a mayor-council form of city of government. The population increased steadily to an estimated 250 in 1976, 350 in 1980, and 528 in 1988. By the early 1980s Hallsburg had its own independent school district. In 1990 the population was 450, and in 2000 it was 518.