Pecan Bayou, one of the five major tributaries of the Colorado River of Texas, is aptly named, for it is a slow-moving stream fed by over twenty creeks. Many area residents believe it is the westernmost bayou in the United States. Pecan Bayou has two main branches. The North Prong headwaters originate on the Callahan Divide in northwestern Callahan County and eastern Taylor County near Eula (at 32°22' N, 99°34' W), twelve miles north of the South Prong's head (at 32°15' N, 99°41' W). The North Prong moves southeast through Callahan County and is dammed six miles south of Clyde to form Lake Clyde. Fed by three small creeks, the two prongs merge in south central Callahan County (at 32°13' N, 99°26' W) and cross the Coleman county line. Four more creeks feed it in Coleman County, and the bayou has fourteen additional small tributaries in Brown and Mills counties. A dam on Pecan Bayou seven miles north of Brownwood forms Lake Brownwood. Below the lake the stream runs just east of the city and enters the Colorado River in Mills County (at 31°43' N, 98°72' W) ninety miles southeast of its headwaters.
Pecan Bayou supported several kinds of plant and animal life that attracted human settlement. Indians, especially the Tonkawas and Comanches, gathered the nuts for which the stream was named as well as red cactus fruit, wild plums, and acorns. The creeks were also known for their abundant fish and mussels. Pecan Bayou was a fabled fishing stream during the frontier era and received favorable comment from travelers and soldiers for its beauty, varied flora and fauna, sweetness of drinking water, presumed richness of soil, and abundant pecan and oak timber.
The Pecan Bayou region was traversed by many military expeditions and explorations before the Civil War, including those of Robert S. Neighbors in 1849, R. B. Marcy in 1851, and A. S. Johnston in 1855–56. Gen. W. G. Belknap recommended establishment of a military post in the Pecan Bayou region in 1851 and planned an expedition to begin this work, but his proposal was not fulfilled.
The shallow waterways that run into Pecan Bayou retain many of their natural characteristics, in part because the area that the stream drains is not densely populated.