Oakalla is at the confluence of Rocky Creek and the Lampasas River, off U.S. Highway 183 in far northeastern Burnet County. The first settlers arrived in the area in the 1850s. Oakalla officially came into being on May 19, 1879, when its post office was opened. By 1881 the community had a cotton gin, a drugstore, a blacksmith shop, a general store, and a doctor; by 1890 it included Baptist and Methodist congregations, a cotton gin, a gristmill, eight other businesses, and a population of 100. The settlement supported fourteen businesses by 1896, and its population had risen to 175. Schools in the area were private until a cooperative was built with classrooms on the second floor. The two-acre school site was deeded in 1890. The school also functioned as a place of worship until 1908, when the Oakalla Baptist Church erected a meetinghouse. Methodists met in the schoolhouse until March 1923, when C. W. Tedder and his mother, Mary, deeded land for a Methodist church; it was constructed in 1925. Both churches were still active in 1990. In 1920 the wooden school building was torn down, and a two-room structure was built of stones from the old Rock School on Gregory Branch. In 1929 two more rooms were added. The Oakalla post office was discontinued sometime after 1930. In 1946 Oakalla high school students were transferred to Briggs, and in 1956 the elementary students followed. The local district was consolidated with that of Lampasas in 1958. Oakalla's population was estimated at 180 in 1925 and at 250 in 1931, when ten local businesses were in operation. From 1940 to 1970 the population level hovered around 100, then decreased to forty-five by the late 1980s. In 1990 Oakalla had a general store and a population of forty-five, and the 1920 school building was in use as a community center and county library branch. The population remained the same in 2000.