Luella was an incorporated farming community on State Highway 11 four miles southeast of Sherman in east central Grayson County. It was settled in 1888, when the tracks of the St. Louis Southwestern Railway reached the area, and Luella was established as a post office branch for the railroad's Lynn Station. In 1914 it had fifty people and seven businesses. The community remained small, and it lost its post office in 1924. For the next few decades it served as a community center for area farmers. Sometime in the 1970s, the town apparently voted to disincorporate. Starting in the early 1980s, however, the town began to grow when it became a bedroom community for nearby Sherman. In 1989 it had an estimated 441 residents, and in 1990, 559. In 2000 the population was 639.
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