Hamilton, the county seat of Hamilton County, is at the intersection of U.S. Highway 281, State highways 22 and 36, and Farm roads 218 and 932, in the Pecan Creek valley in the center of the county. The first settlers came to the area in 1855, and the first store in Hamilton was opened the same year by James M. Rice and Henry Standefer. Hamilton became the county seat when the county was founded in 1858 and was named, like the county, for South Carolina governor James Hamilton. The post office was established in 1861, and by 1873 the population was 200. The Civil War and Indian attacks, which continued until 1876, slowed the growth of Hamilton. During the 1890s two attempts were made to establish a new county seat, on Cowhouse Creek and on the banks of the Leon River, but both failed. By 1896 Hamilton had a population of 1,100, a grocery, two saloons, and three general stores. In 1899 a flood destroyed many of the homes in Hamilton and drowned one resident.
Railroad service did not begin until 1907–08, when the Stephenville, North and South Texas Railway was extended from Stephenville to Hamilton. The St. Louis Southwestern of Texas also served the community for many years. By 1910 the population was 1,548, and in 1911 Hamilton was incorporated. At one time the town supported five cotton gins and, until Prohibition, a row of saloons along the north side of the town square. The population was 2,716 in 1940. In 1941 or 1942 the Stephenville, North and South was discontinued. By 1950 the population had increased to 3,080. In 1954 a flood in the Pecan Creek valley caused a million dollars in damages to area businesses. Changing farm patterns caused some decline. The population after the 1960 high of 3,016 declined to 2,760 in 1970 before hitting a new high of 3,189 in 1980. In 1990 the population was 2,937, and in 2000 it was 2,977. Hamilton remains an important market center with banks and more than 100 businesses, including plants that manufacture clothes, wood and steel products, and dairy products. The native limestone courthouse, built in 1887 to replace the previous two, which burned down, now also serves as the county museum. Hamilton calls itself the dove-hunting capital of Texas and holds an Annual Dove Festival at the late-summer opening of the dove-hunting season.