The Dallas State Fair and Exposition, to which the present State Fair of Texas traces its origin, was chartered as a private corporation on January 30, 1886, by a group of Dallas businessmen including William H. Gaston, Thomas Marsalis, and John S. Armstrong. James B. Simpson was elected president of the association, and Sydney Smith was appointed as the first secretary. Differences arose among the directors over where to build the new fairgrounds. Gaston proposed property in East Dallas, an eighty-acre tract located within the modern boundaries of Fair Park. C. A. Keating, speaking for the farm implement dealers, voiced strong opposition. No compromise could be reached, so Keating and his supporters secured a charter for a separate event-the Texas State Fair and Exposition, which they announced would open just north of town on October 25, one day ahead of the Dallas State Fair. Exhibit facilities and a racetrack were built at each location, and both events attracted sizable crowds that fall. Attendance at the Dallas State Fair was estimated in excess of 100,000, but revenues for the fairs failed to meet expenses; the rival associations merged in 1887 to become the Texas State Fair and Dallas Exposition. Despite indebtedness of more than $100,000, the directors voted to expand the fairgrounds by purchasing thirty-seven acres adjacent to the East Dallas site. Thousands came to the fair each year to view the finest racing stock, cattle sales, balloon ascents, and displays of farm machinery. Women competed for prizes in baking, preserving, and needlework. Concerts and appearances by such notables as John Philip Sousa, William Jennings Bryan, Carry Nation, and Booker T. Washington were added attractions. But the popular success of the exposition was shadowed by repeated fires, mishaps, and mounting debt. A grandstand collapsed during a fireworks show in 1900, and the main exhibit building burned to the ground two years later. When the Texas legislature banned gambling on horse races in 1903, thereby eliminating the fair's main source of income, the association faced a financial crisis. To protect this valuable community asset, the Texas State Fair sold its property to the city of Dallas in 1904 under an agreement that set aside a period each fall to hold the annual exposition.
The reorganized State Fair of Texas prospered immediately, establishing new records for receipts and attendance as 300,000 people streamed through the gates in 1905. President William Howard Taft visited the fair in 1909, and Woodrow Wilson delivered a speech in 1911. Automobile races and stunt flying exhibitions became the top attractions. Attendance passed the one million mark in 1916. World War I caused the 1918 fair to be canceled, and Fair Park was converted into a temporary army encampment. The 1920s brought significant development for the fairgrounds. A magnificent auditorium-eventually known as the Music Hall-was completed in 1925, and outstanding New York shows were presented to Texas audiences for the first time. The Texas-Oklahoma football game was established as an annual event in 1929, and in 1930 the racetrack complex was razed to permit construction of a 46,000-seat stadium that was later renamed the Cotton Bowl. In 1934, largely through the efforts of civic leader R. L. Thornton, Fair Park was selected as the central exposition site for the proposed Texas Centennial celebration. No state fair was scheduled in 1935, and construction began on a $25 million project that transformed the existing fairgrounds into a masterpiece of art and imagination. The 1936 Texas Centennial Exposition attracted more than six million people during its six-month run. A similar event on a smaller scale, the Pan American Exposition, was presented in 1937. No fairs were held during the war years of 1942–45. Under Thornton's leadership, the State Fair of Texas entered an era of unprecedented growth after World War II. Attendance topped two million in 1949.
Highlights of the 1950s included the development of an international livestock show, the installation of a monorail system, a visit from Vice President Richard Nixon, and the first appearance of Big Tex, a fifty-two-foot cowboy figure erected in the center of the grounds. Since 1960 each exposition has been keyed to a theme. A single-day attendance record of 345,469 was set in 1966, and in 1968 the total number of fairgoers exceeded three million for the first time. Major renovation of the Cotton Bowl and Music Hall was accomplished during the twelve years that Robert B. Cullum served as state fair president. Tragic midway accidents in 1979 and 1983 led to the adoption of a ride safety program that is considered a model for the amusement industry. In 1986 Fair Park was designated a National Historic Landmark, and the State Fair of Texas hosted a thirty-one-day exposition celebrating both the Texas Sesquicentennial and the fair's own 100th anniversary. The event attracted 3,959,058 visitors, the largest attendance ever recorded at an American state fair. As the fair moved into its second century of operation, new leadership assumed command. In 1988 Errol W. McKoy was named president with responsibility for the organization's daily operation. Joe Boyd Neuhoff was elected chairman of the board of directors in 1993. The length of the traditional fair season was extended from seventeen to twenty-four days, and corporate sponsorship began to play an increasingly important role in programming for the annual event. Involvement by such companies as Exxon, NationsBank, Southwest Airlines, Miller Brewing Company, Coca Cola, and Dr Pepper made it possible for the State Fair of Texas to offer its visitors a range of exhibits, entertainment, and services that are unmatched by any annual exposition in North America. During the three-week State Fair in October attendance in the early 1990s usually reached over three million.