McAllen is on U.S. Highway 83 about sixteen miles west of Weslaco and thirty-five miles west of Harlingen in southern Hidalgo County. It is situated on land that was part of porciones 63 and 64, granted respectively by Spain to Antonio Gutiérrez and Juan Antonio Villareal in 1767. Gutiérrez and his heirs inhabited the land at least up to 1883, and Villareal's heirs lived on his land for at least fifty years prior to 1852. The Santa Anita Ranch was established around 1797 by José Manuel Gómez, who received the land grant from Spain in 1800. He raised cattle, sheep, goats, and horses on his ranch and helped to continue colonizing the area. His great-granddaughter Salomé Ballí, who inherited the land in the early 1800s, married John Young, a Brownsville businessman, about 1848 (see YOUNG, SALOMÉ). They proceeded to acquire land in the surrounding area, and in 1852 Young applied for porciones 64 and 65 in southern Hidalgo County. Young died in 1859, leaving his holdings to his widow and son, John J. Young, with John McAllen, Young's assistant, as manager. McAllen married Salomé Ballí de Young in 1861, and in 1862 they had a son, James Ballí McAllen. They continued adding land to the ranch, which was renamed the McAllen Ranch. The site of present-day McAllen was within the ranch's boundaries.
By 1903 there were scattered ranches in the area, and in March of that year the Hidalgo Irrigation Company was organized. On August 20, 1904, the Hidalgo and San Miguel Extension (now the Sam Fordyce Branch) of the St. Louis, Brownsville and Mexico Railway reached the Santa Anita Ranch. John McAllen and his son James donated land to have the railroad cross their land. On December 5 the McAllen Townsite Company was formed by Uriah Lott, Leonidas C. Hill, Sr., John McAllen, James Ballí McAllen, and John J. Young. The new community, which was named for John McAllen, had the depot nearest to the county seat, Hidalgo, eight miles to the south. That year the community also had a general store owned by Manuel Samano and a restaurant as well as a cluster of eight or nine tents. In 1907 a post office named McAllen was established. The new community did not grow very rapidly and was endangered by a competing community that was established on May 16, 1907, two miles east of it by William Briggs, O. E. M. Jones and John Closner. The second town came to be known as East McAllen. By 1908 the Rio Bravo Irrigation Company was finishing a canal to it, and a hardware store and furniture store were under construction there. East McAllen also had five stores, two taverns, and two lumberyards and an estimated population of 300. Around 1909 W. E. Stuart constructed the town's first brick building, the First State Bank building. That year the town's first newspaper, the McAllen Monitor, began. By 1911, 5,000 acres was under cultivation in East McAllen with produce consisting of cotton, alfalfa, broom corn, citrus fruits, grapes, and figs. East McAllen had an estimated population of 1,000 that year, and West McAllen had ceased to exist. In 1911 the town applied for and was issued a charter of incorporation under the name McAllen. In 1916, 20,000 New York state troops were stationed at McAllen to help with border disturbances. The resulting economic boom increased the population from 1,200 in 1916 to 6,000 in 1920.
The first half of the twentieth century was very difficult for McAllen residents of Mexican descent, as a consequence of the shift from a Hispanic-dominated ranching economy to an Anglo-dominated farming economy. The transfer of power was evident in the segregation of Mexican Americans. Segregation was most obvious in the sales policies of the McAllen Real Estate Board and Delta Development Company, which made certain that the town was fully segregated. Schools in McAllen were segregated through the fifth grade; Mexican children were not expected to go beyond that level. Not until the late 1920s were segregated junior and senior high schools established. Segregation was a reality in all facets of life. In 1939, for instance, Hispanics could be admitted to the hospital but were housed in a separate section in the basement. Even Hispanic doctors were refused entry into the city hospital, despite the fact that the entire community contributed to the maintenance of the facility. Between 1937 and 1942 the United States Farm Security Administration and the Farm Placement Service of Texas established a camp in what is now east central McAllen. It was constructed as housing for migrant agricultural workers and to facilitate the hiring of workers by farmers.
McAllen adopted a home rule charter in 1927. Canning factories, a winery, tortilla plants, wood-working plants, and some oil exploration increased the population to 9,074 by 1930. In 1936 Hiram Garner opened the Valley Distillery, Incorporated, which produced wines from citrus juices. The city of McAllen built a suspension bridge from Hidalgo to Reynosa in 1939 to replace the old one, which collapsed in 1934. The town was a petroleum and farm chemurgic center with a population of 11,877 in 1940, by which time it had adopted the nickname the City of Palms. That year there were 430 businesses in the community, 249 of which were stores. Local retail receipts totaled $6,225,000 that year. In 1941 a suspension bridge replaced the old bridge to Reynosa, Tamaulipas; the new toll bridge was purchased by the city and was officially called the McAllen-Hidalgo-Reynosa International Bridge. Its construction resulted in an increased tourist trade that made McAllen a winter resort and port of entry to Mexico. Oil discovered in the Reynosa area in 1947 resulted in a large migration of people from the Mexican interior that constituted a new tourist market and cheap labor supply for McAllen. The sister cities were linked as a result of the increased traffic between them. The population of McAllen was 20,005 in 1950 and 32,728 in 1960. The McAllen-Hidalgo-Reynosa International Bridge was the number-two port of entry into Mexico in 1954. McAllen was an agricultural, oil, and tourist center in 1970, when the city had a 200-bed hospital and a new air-conditioned high school, the first school in the nation featuring on-site power generated by natural-gas-powered turbines. The tourism industry continued to expand as people traveled to the area from both Mexico and the northern United States. McAllen had twenty schools, forty-nine churches, three banks, a library, a newspaper, two radio stations, and two television stations. In 1970 McAllen reported 860 businesses and 37,636 residents. Public improvements since 1950 included a new city hall, a civic center, an airport terminal, a golf course, and three fire stations.
In 1975 two McAllen high school students were beaten by policemen on the graveyard shift while being booked. The incident made international headlines and brought a federal investigation. In 1976 federal suits were brought against the McAllen Police Department for police brutality. The federal suits were still ongoing in 1993. Through the 1970s and the 1980s McAllen continued to grow. During the late 1980s the McAllen Foreign Trade Zone was an important general-purpose foreign trade zone. The city remained one of the top three ports of entry to the United States from Mexico in 1992. McAllen celebrates several annual events, including the Candlelight Posada, held in Archer Park in early December, the Fourth of July Fajita Cookoff, the Texas Citrus Fiesta, Springfest!, Borderfest, and the Annual Texas Square Dance Jamboree. The city population was estimated at 84,021 in 1990, when McAllen had more than 2,000 businesses. By 2000 the population was 106,414 with 4,772 businesses. McAllen is bordered on all sides by colonias of varying sizes, inhabited primarily by agricultural workers.