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In 1876 the Texas Land Company auctioned lots in anticipation of the arrival of the International-Great Northern Railroad when Taylor was founded that year. The city was named after Edward Moses Taylor, a railroad official, under the name Taylorsville which officially became Taylor in 1892. Immigrants from Moravia and Bohemia (now the Czech Republic) and other Slavic states, as well as from Germany and Austria, helped establish the town. It soon became a busy shipping point for cattle, grain, and cotton.

By 1878 the town had 1,000 residents and thirty-two businesses, twenty-nine of which were destroyed by fire in 1879. Recovery was rapid, however, and more substantial buildings were constructed. In 1882 the Taylor, Bastrop and Houston Railway (later part of the Missouri-Kansas-Texas Railroad) reached the community, and machine shops and a roundhouse serviced both rail lines. In 1882 the town was incorporated with a mayor-council form of city government, and in 1883 a public school system replaced a number of private schools.

By 1890 Taylor had two banks and the first savings and loan institution in Texas. An electric company, a cotton compress, and several newspapers were among the new enterprises. A water line from the San Gabriel River, a 100-man volunteer fire department, imported and local entertainment, and an annual fair made noteworthy news items by 1900.

Since 1900, Taylor's population growth has averaged approximately 128 new residents per year, based on an estimated population of 1100 in the year 1900, and the population in 2010 of 15191, according to the U.S. Census Bureau. Between the years 2000 and 2010, the population grew 11.9%, from 13575 to 15191,[5] about 1.2% per year.