Fertile land and plentiful water drew settlers to this area from as early as the 1840s. This part of Collin County was well populated by 1876 when the Houston and Texas Central Railroad built a water supply stop on Cottonwood Creek near this site. The railroad stop and newly created town lots established a center of commerce for local farmers and their families and provided better equipment and broader markets for agricultural production. The surrounding open prairie soon was developed into small family farms.
The Houston and Texas Central Railroad filed documents to create the town of Allen from the James L. Read survey in 1876. The village was named for Ebenezer Allen, a former Republic and State of Texas attorney general and a founder of the Houston and Texas Central Railroad. A dry goods store, barber shop, and school soon opened in the rapidly growing town. Sam Bass reportedly led an outlaw gang that robbed the Allen Depot on February 22, 1878. This was probably the first successful train robbery in Texas.
By 1884 the town of Allen had three churches, a flour mill, and a population of 350. In 1908 the Texas Traction Company built an electric railway through town, calling it the Interurban. The citizenry numbered 550 by 1915. Allen was incorporated in 1953 with 400 residents. Electric railway service ended in 1948 but railway freight service continued. Strong economic growth in the Dallas-Fort Worth area helped the town's population grow to include more than 19,000 citizens in the 1990s. (1998)