Llano, the county seat and largest town of Llano County, is on the Llano River and State Highway 71, seventy-five miles northwest of Austin. It was founded in compliance with a February 1, 1856, state legislative act establishing Llano County. Tracts donated by John Oatman, Sr., Amariah Wilson, and the Chester B. Starks estate provided a surveyed site of 250 acres for the county seat on both sides of the Llano River near the center of the proposed county. An alternative site, on Wright's Creek, was proposed by the residents of the Bluffton-Tow Valley area. The Llano River location was chosen in an election held on June 14, 1856, under a live oak on the south bank of the river, near the present site of Roy Inks Bridge in Llano. Into the 1870s the town was little more than a frontier trading center, with a handful of log buildings housing business establishments, a post office, and a few homes. In 1879 the first bank, Moore, Foster, and Company, was founded, and during the 1880s Llano acquired a number of new enterprises that served the county's farmers and ranchers. After the county outgrew the one-story stone building that had housed its public offices, in 1885 an ornate brick courthouse was completed on the square on the south side of the river. A fire on January 22, 1892, destroyed this courthouse; the present county courthouse was completed and occupied on August 1, 1893. It is listed in the National Register of Historic Places.
In the 1880s the Llano Rural, the town's first newspaper, was established, followed by the Iron City News, the name of which reflects growing interest in the county's mineral resources. The Rural eventually incorporated several other newspapers, including the Advocate, the Searchlight, and the Gazette, to become the Llano News by the early 1900s.
Anticipation of significant economic growth based on the iron deposits discovered at Iron Mountain in northwestern Llano County attracted capital from Dallas and from northern states, and the boom years of Llano-from 1886 to 1893-were launched. The Llano Improvement and Furnace Company undertook plans for an iron furnace and foundry, as well as for the development of commercial real estate on the hitherto undeveloped north side of the river. Charters were undertaken for a dam, an electric power plant, a streetcar system, and electric street lighting, while expectations of growth were high. Steel-town names such as Birmingham, Pittsburgh, and Bessemer were chosen for streets on the north side; Llano was to be the "Pittsburgh of the West." But only a small dam and the street lighting were completed. By one report, the population reached 7,000 in 1890. In 1892, at the peak of the boom period, the town was incorporated, the river was bridged, and the Austin and Northwestern Railroad was extended to a terminal on the north side of Llano. Because of the improved transportation, several granite cutting and finishing businesses moved to town in this period. Many of the new businesses were begun in the boom period, and substantial brick establishments were constructed around the public square on the north side of the river. Among these, the Algona Hotel became a focal point for the town's new social life. Under the names Franklin and Don Carlos, the hotel changed hands several times; at one point around 1900 it housed the Texas Military Institute. It was damaged by a cyclone in 1900 and burned to the ground in 1923. Because the county's mineral resources, with the significant exception of granite, did not exist in commercially exploitable concentrations, the boom period soon faded. Plans to connect Llano with Fredericksburg via an extension of the San Antonio and Aransas Pass Railway were not fulfilled. A series of fires in the early 1890s, probably set to collect insurance on unprofitable properties, destroyed many of the new business establishments. Such fires were so numerous that fire insurance was denied the town for several years.
Farming, ranching, and the granite industry remained the foundations of the town's economy in the twentieth century. In the 1920s Llano was a major shipping point for cattle; the cotton industry flourished in the county through the 1930s but declined thereafter into insignificance. Granite quarrying and finishing retained their importance, amounting to a million-dollar-a-year industry by the 1950s. The Roy Inks Bridge, named for a former mayor, was built after a flood crest of forty-two feet in 1935 swept away the 1892 structure. By 1964 the town had a new hospital, a post office, school buildings, a community center, a rodeo area, and a golf course, along with a city park and improved water system. Llano was an important link in the Highland Lakes chain of tourist areas and attracted many hunters during the deer season. A winery, feed processing, and insecticide and commercial talc production represented new industry. Actress Sophia Loren, friend and correspondent of Netherlands native Anthony Goossens, priest of Holy Trinity Catholic Church in Llano, contributed to the church fund-raising campaign in 1975. By 1983 the National Register of Historic Places listed, in addition to the courthouse, the Llano jail, the Southern Hotel, and the Badu Building, former bank and home of French immigrant and mineralogist N. J. Badu, now a bed-and-breakfast establishment. The population of Llano was 2,960 in 1950, 3,071 in 1980, and 2,962 in 1990. By 2000 the population was 3,325.