Nalley was a farming community on String Prairie between Lexington and Caldwell in northern Lee County. It was one of the earliest communities in the county, and settlers probably arrived in the area before the Civil War. At its height around the turn of the century the town had one or two stores, a cotton gin, a blacksmith shop, a gristmill, a syrup mill, and a school. The 1898 school census listed an enrollment of fifty-five. Most of the local families moved away before World War II, and by the mid-1930s the community was no longer shown on county highway maps. In 1949 the community school was consolidated with the Lexington Independent School District.
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