Lone Star is on U.S. Highway 259 six miles south of Daingerfield in southern Morris County. The site was probably settled around the time of the Civil War, but a community did not develop until the 1930s, when Dallas-based Lone Star Steel established a steel mill in the area. During World War II the plant was expanded to cover 600 acres and employed as many as 6,000 workers. Many of the workers settled in the area, and by the mid-1950s Lone Star was an incorporated city with a reported population of 1,131. The town continued to prosper in the 1970s, and in 1980 it had a population of 2,006 and eighty-six businesses. During the 1980s the steel plant began having economic difficulties, mainly because of the slump in the oil industry and competition from foreign steel suppliers. In 1986 company officials laid off 2,000 of their 3,800 employees. Subsequently the town declined, and by 1990 its population had fallen to 1,615. In 2000 the community contained 1,631 people and eighty-two businesses.