Tolar is on U.S. Highway 377 seven miles southwest of Granbury in southwestern Hood County. It was first settled around 1890, when the tracks of the Fort Worth and Rio Grande Railway reached the area. The community was named by W. L. McGaughey in honor of his friend Alf Tolar, who lived in Abilene. A post office opened at the community in 1890, and within the decade Tolar had established itself as a trade center for area farmers and ranchers. In addition to a gin, a general store, and a blacksmith shop, Tolar provided its estimated 171 residents with two churches and an elementary school. Its population had reached 460 by 1914, and by the mid-1920s Tolar had a high school, a bank, a weekly newspaper, and some six other businesses. Several buildings in Tolar are made of petrified wood found in the area; in 1969 collecting and shipping this material was a local industry. For a time the population declined because of the Great Depression, World War II, and the growth of nearby Fort Worth. In the mid-1960s Tolar had an estimated 283 residents and five businesses, and in the mid-1970s its population rose above 300 for the first time since the 1950s. During the late 1980s Tolar reported 415 residents, and in 1990, some 523. The population was 504 in 2000.