The Handbook of Texas Online provides some
background:
Malakoff is at the junction of State Highways 31 and 198 and Farm Roads 2636, 3062, and 3441, eight miles west of Athens in western Henderson County. The area was first settled by Jane Irvine, a widow from Alabama, who immigrated with her family to the area before 1835 and built a gristmill on Caney Creek 1½ miles north of the site of the present town. A small community, known as Caney Creek, grew up around the mill. In 1852 the name was changed to Mitcham Chapel after a Methodist church of the same name organized by the Rev. Hezekiah Mitcham. Around 1854 the town applied for a post office under the suggested name of Mitcham or Purdon. Both names had previously been used, so postal officials in Washington suggested the name Malakoff, after a Russian fortification where the battle of Malakoff took place during the Crimean War. The town's residents accepted the idea, and in 1885 a post office was granted. On the eve of the Civil War Malakoff was a thriving community with a church, several mercantile stores, a blacksmith's shop, a saloon, two cotton gins, and a subscription school. Cotton, the town's most important product, was hauled by ox wagon to the Trinity River and shipped downstream.
The town's economy suffered a sharp downturn during the Civil War but began to recover after the railroad was built through Henderson County in 1880. A new townsite, on the rail line 1½ miles south of the old business district, was platted on the Peter Tomlinson survey, and most of the businesses and residents moved there. W. A. Martin donated land in "New Malakoff" for Methodist and Baptist churches, and in 1889 a school began operating there. A few residents, however, remained at the old townsite, and the school there continued to operate until 1903, when the building burned.
By 1904 Malakoff had nine general stores, two grocery stores, three drugstores, a furniture store, two lumberyards, a livery stable, a brick company, a butcher shop, a hotel, six doctors, two barbers, an undertaker, and nine builders. The First State Bank of Malakoff opened in 1908. The town's growth was further spurred by the discovery of lignite coal in the area in 1912. Several mine operations sprang up, which in a few years were consolidated by the Malakoff Fuel Company. By the 1920s the mines represented the county's largest industry and employed more than 600, including a large number of Mexican Americans. The mining operation was given additional impetus when the Texas Power and Light Company decided to build a coal-powered electric generating station nearby. Between 1920 and 1940 the town's population grew rapidly, from 750 in 1920, to 1,200 in 1930, and 2,168 in 1940. In October 1942, however, TP&L decided to convert its generator to natural gas. The Malakoff Fuel Company began laying off employees soon thereafter and closed down its operations in 1945. The population declined to 1,283 by 1950. Not until the Tarrant County Water Board began constructing nearby Cedar Creek Reservoir in the mid-1960s did it begin to grow again.
Malakoff was incorporated by election in July 1948. During the 1930s it gained prominence for the discovery of a large prehistoric carved head, known as the "Malakoff Man," found in the excavation of a gravel pit in 1929. Lignite mining was revived in the area, this time to fuel the TP&L Forest Grove Plant, under construction two miles northeast of the business district. In 1990 Malakoff had a reported 2,038 residents and 42 businesses. The population reached 2,257 with 180 businesses in 2000.