Karnes City, the county seat of Karnes County since 1894, is at the intersection of U.S. Highway 181 and State highways 80 and 123, in the central part of the county some fifty miles southeast of San Antonio. On December 12, 1890, a group of Cuero businessmen, styled as Buchel, Wagner and Company, purchased a 1,000-acre tract from J. L. Calvert for five dollars an acre. Because the tract was near the geographic center of the county and astride the San Antonio and Aransas Pass Railway (built in 1886–87), the firm purchased it for plotting a townsite that could ultimately become the new county seat. The town was named in honor of Texas patriot Henry Wax Karnes, but to distinguish it from Kerens in North Texas, the post office department added "City" to the name. The Karnes City post office was officially established on April 1, 1891. The first store in the new town was a small building in which R. F. Harris had groceries and the post office. Buchel, Wagner and Company soon built a general merchandise store in the community. The first hotel there was the Sullivan House; next was the Kolodziej Hotel, completed in April 1891. In May 1892 a public auction of lots was held. When it became apparent that the town would grow, the San Antonio and Aransas Pass Railway built a side track where lumber for new homes and businesses could be unloaded. Other early businesses included Doc Puckett's saloon, the A. Gehler lumberyard, Wiley Parker's livery stable, and J. B. Pollock's drugstore. Karnes City, by then a flourishing trade and cattle-shipping center, won the December 21, 1893, election to become county seat, beating out Runge, Kenedy, and Helena (the seat of government since 1854). In January 1894 contested records were carted to Karnes City by night. Construction began on a new courthouse and jail. Jail cages and prisoners from Helena were moved to Karnes City in March, and on May 25, 1894, the prisoner who had robbed a train at Brackenridge (later Falls City) and killed the fireman was hanged on gallows constructed on the new courthouse square. In June the Karnes City Water Works contracted to supply water. On October 25, 1894, the new courthouse was dedicated. In 1903 Karnes City had a population of 600, and in 1909, 900.
The first newspaper in Karnes City, the Karnes City Reporter, began publishing in 1891. Other subsequent newspapers included the Karnes Reformer, a Populist (see PEOPLE'S PARTY) newspaper established in 1894; the Karnes City Times (established 1895); the Karnes City Kicker (1896); the Karnes City Rustler (1898); and the Karnes Citation (1903; still publishing in 1993). The first banking business was that conducted by Buchel, Wagner and Company, which held local deposits in its safe and provided a checking service. The Karnes County National Bank was chartered in 1900. About 1907 the City National Bank was established, and in the early 1920s, the Guaranty State Bank. Both of these were eventually absorbed by the Karnes County National Bank, which was still operating in 1993. In 1914 Karnes City incorporated. Its business district was near the courthouse. As many as six passenger trains arrived daily. The Karnes City Chamber of Commerce was organized in 1926. In addition, a number of civic and fraternal organizations were very active in the early 1900s. The Woodmen of the World met in the old bank building, and a Masonic lodge was established. The Max Menn Post of the American Legion was organized in Karnes City after World War I. The Sociedad Mutualista Benito Juarez No. 1 de Karnes City was organized in 1922 and chartered in 1925. The Veterans of Foreign Wars Post No. 8572 was chartered in 1979.
The first school in Karnes City opened in October 1891. It was a small two-story frame building in which Miss Maggie Skiles taught fifteen pupils. The building was used for classes on weekdays, for dances at night, and for Sunday school and church services on Sunday. The Karnes City Independent School District was organized on May 24, 1894. A school for Blacks was established in 1902, and one for Mexican Americans in 1910. A $40,000 bond issue was passed in 1925 to build a new high school. In the 1940s the Karnes City schools were integrated (see CIVIL-RIGHTS MOVEMENT), and in 1958 the Karnes City ISD consolidated with the oil, gas, and uranium-rich Fashing common school district, consequently more than doubling its tax base. A new high school was built at Karnes City in 1961, a new junior high in 1982, and a new elementary school in 1989. A public library was built in 1972. In 1993 Karnes City had twelve churches, more than 125 businesses, and a number of civic, fraternal, and patriotic organizations. The Karnes City Town and Country Days Fair and Parade, begun in 1965, continued to be held in 1993. That year the Karnes City economy was based on farming, ranching, related agribusinesses, fiberglass and steel products, oil and gas production, and uranium mining and milling. Its population was 600 by 1900, 787 in 1920, 1,571 in 1940, 2,603 in 1960, 3,296 in 1980, and 3,146 in 1993. In 2000 the population was 3,457.