The city has a long history. First settled in 1846, it was an important transfer point for supplies and soldiers. It also served as a trading center and was near the intersection of overland routes. By the 1890s, there were approximately 900 people living in Rio Grande City and nine general stores and three grocers.
The post-Civil War period saw the city prosper with the cotton trade. The steamboat industry also helped maintain its prosperity. However, the Great Depression took its toll. By 1931, the population had decreased by nearly a third. In 1926, the city incorporated, but went into debt in 1933. Fortunately, the town recovered from the Depression and reincorporated in 1993.
The Rio Grande City area is home to many historic structures. The city also boasts a shrine to Our Lady of Lourdes and a United Farm Workers Union (UFW). This union organized melon pickers and sought federal protection from the Texas Rangers. Its economy was further diversified by the oil and gas boom of the 1930s. Today, the city has a varied economy based on exports to Mexico and food production. Tourism has also become an important component of the local economy.
Rio Grande City is part of a sprawling heritage corridor spanning about 200 miles from Laredo to Brownsville, TX. This heritage area includes small towns, ranches, and farms, and has been designated a Preserve America community in June 2007.