Lakeway is on Lake Travis and State Highway 620, five miles west of Mansfield Dam in west Travis County. It was founded on the site of a 2,700-acre ranch owned by Houston oilman and rancher Jack (Jake) Josey. In early 1962 three Houston men associated with the Gulfmont Hotel Company-G. Flint Sawtelle, John H. Crooker, Jr., and Lee Blocker-obtained a sixty-day option to purchase the land and plan a hotel and resort community. The name Lakeway was a natural sequel to Gulfmont's Fairway Motor Hotel in McAllen, Texas, so named because it overlooked the fairway of a golf course. The partnership then expanded to a group of ten people, who purchased 880 acres named Josey 1, on which they planned to build an inn and develop a residential community. They bought an additional 2,817 acres in 1964. The inn was owned by the ten partners through a subsidiary known as Lakeway Joint Ventures and leased to the Gulfmont Hotel Company as operators. At the same time the Lakeway Land Company was formed with Flint Sawtelle as president, for the development of real estate. Property sales began on May 30, 1963, and the grand opening of the Lakeway Inn and Marina took place in July.
The Lakeway Land Company was sold to a Dallas group known as Alpert Investment Corporation on April 26, 1971, when there were 300 homes in Lakeway and 1,000 acres had been developed. In July 1974 a substantial majority of resident and nonresident property owners voted to incorporate with the consent of the city of Austin, and the 1,200-acre village of Lakeway resulted. Residents also elected a three-man governing commission, including Newt Herndon, Lakeway's first mayor. The population of Lakeway was 1,020 in 1984, and that of the greater Lakeway area was 3,120. In 1990 the population of Lakeway was 4,044. That figure almost doubled to 8,002 by 2000.