In the early 1800s, the Comanche, Kiowa, Apache and Lipan tribes inhabited the area. Mitchell County was organized in 1881, and the town of Colorado was designated as the county seat. It sprung up overnight as a typical Wild West town, with the added attraction of a short-lived gold strike. The Texas and Pacific Railway built their line to Colorado, making it West Texas' first boomtown. It is the center of a rich agricultural region that includes petroleum and wind industries.

Hunters here seek pronghorn antelope, deer, javelina, wild turkey, upland game birds and waterfowl. Downtown offers excellent antique and other shops.

Railhead Trade Days are held on the third weekend of March, June and November. Other events include the Old Timers Reunion and Cowboy Breakfast the last weekend in September, Ranch Rodeo in June and the annual J.O. Dockery July Fourth Fly-in.