Texas Wesleyan College was established by Swedish Methodists in Austin. On June 15, 1907, at a meeting of Methodist ministers in Waco, the question of a Swedish Methodist college was first brought up. A committee was formed with Rev. O. E. Olander, Rev. O. F. Linstrum, and Rev. T. J. Westerberg as members. Rev. Olander worked for the next two years to establish the college. He first found twenty-one acres of land in north Austin in an area called Wheelers Grove between 24th and 26th streets and Waller Creek and Red River Street. The area is now the site of the University of Texas Law School Building. The total cost of the site was $6,300. The first board of trustees of the college was appointed in February 1909 at the Central Swedish Methodist Church of Austin, and the first president was Rev. O. F. Linstrum. In 1910 the first building on the campus was planned at a cost of $15,000. The cornerstone of the building was laid on August 27, 1911. At the June 9, 1911, meeting of the board of trustees, Olander suggested that the school be named Wesleyan in honor of John Wesley, the founder of Methodism; the name was unanimously approved. On August 31, 1911, Olander deeded the property to the board of trustees of Texas Wesleyan College. With the help of members of the Austin Business League money was raised to pay off the entire property.
Texas Wesleyan College opened its doors on January 9, 1912, with fourteen students. During the 1912–13 school year there were forty-seven students enrolled; thirty-two students enrolled during the 1914–15 term. Under the leadership of Olander the school prospered through the 1920s. In 1926 Rev. Frank A. Lundberg became president. The Olanders, in addition to running the school, operated the Sunnybrook Dairy in Austin, which provided work for Swedish boys seeking higher education. In 1928 a large tabernacle was built on the site of the college; it was used by students as well as other religious groups in Austin. Rev. Oscar Linstrum became president of the school in 1930. Tuition for two semesters was $18 to $22, and room and board cost $15. Courses offered included English, math, social studies, science, Swedish, Christian ethics, and Bible geography. Latin, German, and Swedish literature courses were offered, and there was also a music department at the school. Strict rules of conduct for students were enforced. Tobacco and profane language were forbidden. All students had to retire at 10 P.M., and attendance at chapel service every morning was required. Students were expected to attend the Central Swedish Methodist Church in Austin and be active in the Epworth League. Organizations at the college included the Literary Society and debate and athletic teams; the men's basketball team was coached by Clyde Littlefield. The "W" Association acted as the booster club for the college, and the student newspaper was called the Recorder.
The 1930s saw a movement away from things ethnic and a movement to be more "American." Swedish churches in Austin began to offer services in English instead of Swedish. Interest in ethnic colleges such as Texas Wesleyan declined, and the University of Texas on the college's western side was eager to expand. On May 26, 1931, the college's board of trustees considered and accepted an offer from the University of Texas to purchase the school grounds for $135,000. The trustees also voted to continue operation of the school, and for several years the University of Texas granted the college free use of the grounds. In May 1935 the name of Texas Wesleyan College was changed to Texas Wesleyan Academy, and the number of board members was reduced from twenty-five to nine. In 1936 the academy agreed to loan $100,000 to Texas Wesleyan College at Fort Worth. In June of that year academic courses were discontinued, though a small music school operated for some years, and a scholarship and loan program for descendents of Swedes continued. In February 1939 Texas Wesleyan College at Fort Worth filed suit against Texas Wesleyan Academy, stating that the money from the sale of the school was church money and not private money. In June 1941 a court ruled against Texas Wesleyan Academy and ordered that the $100,000 loan to the Fort Worth school be cancelled and that $135,000 in assets be turned over to Texas Wesleyan College. Texas Wesleyan Academy appealed the decision but later reached a compromise. Under that agreement the academy was required to pay all attorneys' fees and cancel the $100,000 loan debt, but was allowed to keep the student scholarship and loan fund, some equipment, and other assets, including property located on East Avenue in Austin. In 1957 the board of Texas Wesleyan Academy discontinued student loans; the music school closed in 1956. In 1961 the board of trustees officially changed the name of Texas Wesleyan Academy to Texas Wesleyan Foundation. The scholarship fund was continued until the last awards were given for the 1976–77 school year. In 1989 a Texas historical marker was erected at the site of Texas Wesleyan College in Austin.