Ladonia is on State highways 34 and 50, Farm roads 2456 and 64, and the Atchison, Topeka and Santa Fe Railway sixteen miles southeast of Bonham in the southeastern corner of Fannin County. The area was settled around 1840 by James MacFarland and Daniel Davis. Other early settlers included Patrick Old, who built the first house, and Frank McCown, the community's first merchant. James H. Cole, a carpenter who moved to the county in 1855, planned and staked out the actual townsite. The community was first known as McCownville. In 1857 McCown changed the name to La Donna, according to local legend to honor La Donna Millsay, a traveler on a wagontrain from Tennessee who had entertained local residents with her singing. By 1858 the settlement had a post office named Ladonia. Ladonia grew rapidly after 1860 because of its location in a fertile farming area and because of the arrival in 1887 of the Gulf, Colorado and Santa Fe Railway. The community incorporated in 1885 and around that time had a population of 350, two cotton gins, a bank, a flour mill, a school, and a number of churches. The arrival of the railroad, which town officials had enticed with a bonus, made Ladonia an agricultural marketing town for cotton, corn, oats, and wheat. Its population was reported as 1,500 by the early 1890s and had increased to 2,000 by 1897, when the town reported some 100 businesses, including six dry-goods stores, three drugstores, three cotton gins, and two banks. In 1936 Ladonia had 1,199 residents and thirty-nine businesses. By the mid-1970s it had 815 residents and eighteen businesses; at that time the town's major industry was Texas-A-Pak, which shipped horse meat for sale in European markets. Also during the 1970s the community's school was consolidated with that of nearby Pecan Gap to form the Fannindel school district. In 1989 Ladonia reported a population of 677 and ten businesses, and in 1990 it reported a population of 658. In 2000 the population was 667.