Harwood, on the Southern Pacific Railroad and U.S. Highway 90 one mile north of Interstate Highway 10 in northern Gonzales County, was founded in 1874 during the westward expansion of the Galveston, Harrisburg and San Antonio Railway. The town was named for Thomas Moore Harwood, who moved to Texas in 1850 and began a law practice in Gonzales in 1853. He worked with Thomas W. Peirce in the acquisition of land and the development of the railway.
Harwood was in a local census area of Gonzales County known as Mule Creek, after a local stream. At the time the community was founded a general store-post office was in operation on Mule Creek a mile west of the present townsite, on the stagecoach and cattle trail connecting Gonzales to Lockhart and Austin. The trail joined the main Chisholm Trail. The proprietor of the store and postmaster at Mule Creek was Alfred House. A Mule Creek post office operated from 1872 until 1874, when a post office was opened in Harwood. In 1880 Harwood had a population of 155. By 1892 it reached a high of 350 but declined thereafter. In 1913 the town was incorporated, apparently to prevent the opening of a saloon that was opposed by the majority of the voters. At the time of incorporation there was an election of a mayor and commissioners; there is no record, however, of any subsequent election or any activities of a town government. In 1915 Harwood had 300 residents.
From its founding until the 1940s Harwood was a rail center for the shipment of cotton, cattle, and firewood. In the 1920s and 1930s the town had two cotton gins that often operated twenty-four hours a day during the peak of the cotton harvest. The widespread use of petroleum products for heating had eliminated the cordwood industry by the 1930s. The more efficient production of cotton in other areas of the state had decreased cotton raising in the Harwood area by the 1940s. An air-cooled monoplane was built in 1935 in Harwood by Walter Huff and was flown near Waelder, Texas. Huff also made light plane propellers and sold them in many parts of the United States. His company was named Standard Aircraft Company of Harwood. The construction was begun in a building that had been a blacksmith shop. Cattle ranching, poultry raising, and egg production are major elements of the area's economy. Watermelon production was high in the mid-twentieth century, but decreased drastically in the 1980s.
During the heyday of Harwood as a rail shipping center, the town had several general stores, a bank, a lumberyard, a hotel, and ancillary enterprises. The advent of good highways and motor transportation gradually led to a decline of most of these activities. In 1990 the town had one large farm and ranch supply store, the post office, a restaurant, two churches, a large community center, and a reported population of 112. In 2000 the population remained the same. The community center had a museum of local memorabilia.