Alvarado, the oldest town in Johnson County, is at the junction of U.S. highways 67 and 81 and Interstate Highway 35W, fifteen miles east of Cleburne in eastern Johnson County. In the winter of 1849 William Balch staked out a claim near an old Indian trail. His family did not last until spring but returned in 1851. Two years later Balch and a fellow settler, G. H. Sigler, laid out half-acre town lots. The community's first sheriff, A. H. Onstoott, is credited with naming Alvarado for Alvaredo, Vera Cruz, Mexico, where he fought in a battle during the Mexican War. By the summer of 1854 Alvarado had an estimated 100 families and postal service.
Residents voted to incorporate in 1878. In 1881 the tracks of the Gulf, Colorado and Santa Fe and the Missouri, Kansas and Texas railroads arrived. Within a few years the population surpassed 1,000. By that time the community had a bank chartered in 1880, a newspaper named the Alvarado Bulletin, two schools, a number of gins, a hotel, and an opera house. By 1890 a second bank opened and the reported population exceeded 2,000.