Eustace, on U.S. Highway 175 some ten miles northwest of Athens in northwestern Henderson County, was on the J. M. Beltram survey. In 1900, when the Texas and New Orleans Railroad extended its line eastward from Kemp to Athens, the area reportedly had only one inhabitant, who occupied a rented log cabin. Businessmen from nearby communities moved to be closer to the new railroad line. The town that developed was first called Moseley by W. L. Moseley, who had sold the railroad right-of-way across the Beltram survey and who had sold the first lots in the town. It was also called Jolo in honor of Joe L. Pickle, the town blacksmith. A post office for Jolo was established in 1900, but that same year the name was changed to Eustace, for Capt. W. T. Eustace, a popular Confederate Civil War veteran. Captain Eustace came to Henderson County from Virginia in 1867 and settled at the county seat, Athens, where he was active in local and county politics. By 1901 the name Eustace began to appear on deed records. The 1900 census reported a population of 150 at the community, and by 1904 the town had three churches, two general stores, a grocery store, a blacksmith, a restaurant, a saloon, and a cotton gin. Eustace was incorporated in 1926. Its population grew slowly, from 450 in 1940 to 541 in 1980 to an estimated 662 in 1990 to 798 in 2000. The early economy of the town was based primarily on cotton, but later its economy, along with that of other East Texas towns, gradually shifted to livestock raising and small-scale truck farming. During the 1970s and 1980s the local economy was given a boost by the discovery of oil and the production of petroleum products. In the late 1980s, however, these resources were being rapidly depleted. The town also benefited economically from nearby recreational areas, including Cedar Creek Lake (established 1964) five miles southwest, and Purtis Creek State Recreation Area (established 1988), four miles north. In 1989 the town comprised twenty-six small businesses, five churches, and a school with a total enrollment of some 1,000 students (kindergarten through high school grades).
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