Talco is on U.S. Highway 271 and Farm Road 71, sixteen miles northwest of Mount Pleasant in northwestern Titus County. A post office named Gouldsboro was opened in 1856 with Nehemiah C. Gould as postmaster and may have been located near the site of present Talco. It was closed in 1860, but another post office, this one named Goolesboro, was opened in 1878 about 1½ miles east of what is now the site of Talco. This office was in the community that would become Talco. It was at the edge of an open prairie that extended through Franklin County; the prairie was the site of several open-range ranching operations in the post-Civil War era. The community served these ranches, providing the post office, a general store, a physician's office, and a blacksmith shop. In 1884 its population was thirty. In 1910 postal officials asked that the name of the office be changed, since other offices in Texas had similar names. The new name, Talco, was suggested by local merchant J. H. Brown, from the initials appearing on the wrapper of a candy bar marketed by the Texas, Arkansas, and Louisiana Candy Company. As construction on the Paris and Mount Pleasant Railroad began, it became obvious that Talco would be bypassed, so its residents laid out a new townsite closer to the railroad; the new site included a depot. Quinton S. Loveless moved his store and the post office to the new site in 1912, and other businesses followed. The town grew rapidly at its new site, and by 1914 it had a bank, several stores, a telephone company, and an estimated population of 300. Its population remained at about that level through the early 1930s; in 1933 it was estimated to be 350.
In February 1936 oil was discovered in what came to be known as the Talco oilfield, transforming the small rural community into an oil boomtown as people flocked to the area to look for oil or to work on the drilling rigs. As one resident recalled, "People went crazy. There was no place for them to sleep, no place for them to eat, but still they came to Talco." By the end of the first week, bidding on oil leases in the area had become frantic. In a special Sunday session, the school trustees met and accepted an offer of $350 for a lease on the school playground, which was smaller than an acre. The intense excitement abated somewhat when it was discovered that the oil was of low gravity and thus less valuable; but it was ideal for the production of asphalt, and Talco was soon billing itself as the "asphalt capital of the world." After its incorporation in early March, the city rapidly voted for bonds to construct a municipal water and sewage system and to pave the local streets. Also, a bond issue of $25,000 was approved for the construction of a new city hall. In the late 1930s the town population was estimated at nearly 2,000. By the time of the 1940 census, however, the boom had ended, and the population had stabilized at 912. During the 1950s Talco began to grow again; its population reached 1,250 in 1960, but by 1970 it had fallen to 860, and by 1980, to 751. Shortly after the initial burst of drilling, geologists had predicted that the field contained reserves of some 160 million barrels of oil, or a fifteen-to-twenty-year supply at contemporary production levels. The field was still in production in 1984, when a total of 2,982,713 barrels was produced. Total cumulative production at the end of 1984 was 266,115,430 barrels. At that time Talco was still heavily dependent on the oilfield for its prosperity. In 1990 Talco reported 592 residents. The population decreased to 570 in 2000, and reached 523 in 2014.