Thomas Bean, a wealthy Bonham landowner and surveyor, donated fifty acres of land in southeast Grayson County to be used for a branch railroad line from Sherman to Commerce. Bean died in 1887; in that year the city of Tom Bean was established. Nearby Whitemound, which was bypassed by the railroad, lost its post office to Tom Bean's city in 1888; many Whitemound settlers moved to the new town. Mr. Bean's estate began to sell town lots surrounding the railroad in the 1890s. The city school was moved in 1891 from a one-room structure to a two-story building with an auditorium. Several Christian denominations, including the Church of Christ, Baptist, Presbyterian, and Methodist, established churches in town. The city charter was signed in 1897 and the first mayor was Ice B. Reeves.
In the early days of the 20th century, the city boomed. Within a few years, it boasted a grain company, a furniture company, a drugstore, a newspaper called the Tom Bean Bulletin, a saloon, a dance hall, a movie theater, and the Tom Bean social club. As time progressed, the sharp increase in automobile travel and transport, and the decline of cotton as the principal crop of the area, led businesses to the larger cities of Denison and Sherman.
Though never again the railroad boomtown of the late 19th and early 20th centuries, the community enjoyed a growth spurt in the 1950s and 1980s, celebrating its centennial in 1987. The city of Tom Bean continues to thrive.

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