Lazbuddie, at the junction of Farm roads 145 and 1172 in southeastern Parmer County, had its beginning in 1902, when Thomas Kelly purchased the Capitol Syndicate's Red Tower Camp, comprising 55,136 acres (see XIT RANCH). From it he developed the Star Ranch, on which directions and locations were given according to the names of thirty windmills scattered over the vast acreage. After a few years Kelly placed some of this land on the market for homesteaders, and in 1907 a school was established on the property.
The community was named for D. Luther (Laz) Green and Andrew (Buddie) Sherley, who in 1924 purchased a tract from the Star Ranch and opened a store, the Lazbuddie Commissary, at which a post office was established in May 1926. Until the Rural Electrification Administration came in, the town's only telephone was also located there. Soon a country town sprang up around the establishment, and in 1927 the Star Ranch school had a red brick building. By 1930 a second store and three churches had been established. Tent shows and medicine wagons often came by during the Great Depression era. In 1947 the town listed a population of seventy-five.
In the 1980s Lazbuddie remained an active agricultural center with seven agribusinesses (including two gins and an elevator), four churches, and new school facilities. The post office is still housed in the original Lazbuddie store building. The Lazbuddie dam and reservoir, built in 1979–80 on Running Water Draw six miles northeast of town, provides recreation and irrigation for area farmers and ranchers. In 1980 through 2000 Lazbuddie reported a population of 248.