The Allen brothers—Augustus Chapman and John Kirby—explored town sites on Buffalo Bayou and Galveston Bay. According to historian David McComb, "[T]he brothers, on August 26, 1836, bought from Elizabeth E. Parrott, wife of T.F.L. Parrott and widow of John Austin, the south half of the lower league [2,214-acre (896 ha) tract] granted to her by her late husband. They paid $5,000 total, but only $1,000 of this in cash; notes made up the remainder."
The Allen brothers ran their first advertisement for Houston just four days later in the Telegraph and Texas Register, naming the notional town in honor of President Sam Houston. They successfully lobbied the Republic of Texas Congress to designate Houston as the temporary capital, agreeing to provide the new government with a capital building. About a dozen persons resided in the town at the beginning of 1837, but that number grew to about 1,500 by the time the Texas Congress convened in Houston for the first time that May.
Houston was granted incorporation on June 5, 1837, with James S. Holman becoming its first mayor. In the same year, Houston became the county seat of Harrisburg County (now Harris County, Texas).
In 1839, the Republic of Texas relocated its capital to Austin. The town suffered another setback that year when a yellow fever epidemic claimed about one life out of every eight residents. Yet it persisted as a commercial center, forming a symbiosis with its Gulf Coast port, Galveston. Landlocked farmers brought their produce to Houston, using Buffalo Bayou to gain access to Galveston and the Gulf of Mexico. Houston merchants profited from selling staples to farmers and shipping the farmers' produce to Galveston.
The great majority of slaves in Texas came with their owners from the older slave states. Sizable numbers, however, came through the domestic slave trade. New Orleans was the center of this trade in the Deep South, but slave dealers were in Houston. Thousands of enslaved blacks lived near the city before the Civil War. Many of them near the city worked on sugar and cotton plantations, while most of those in the city limits had domestic and artisan jobs.
In 1840, the community established a chamber of commerce in part to promote shipping and navigation at the newly created port on Buffalo Bayou.
By 1860, Houston had emerged as a commercial and railroad hub for the export of cotton. Railroad spurs from the Texas inland converged in Houston, where they met rail lines to the ports of Galveston and Beaumont. During the American Civil War, Houston served as a headquarters for General John Magruder, who used the city as an organization point for the Battle of Galveston. After the Civil War, Houston businessmen initiated efforts to widen the city's extensive system of bayous so the city could accept more commerce between downtown and the nearby port of Galveston. By 1890, Houston was the railroad center of Texas.
In 1900, after Galveston was struck by a devastating hurricane, efforts to make Houston into a viable deep-water port were accelerated. The following year, the discovery of oil at the Spindletop oil field near Beaumont prompted the development of the Texas petroleum industry. In 1902, President Theodore Roosevelt approved a $1 million improvement project for the Houston Ship Channel. By 1910, the city's population had reached 78,800, almost doubling from a decade before. African Americans formed a large part of the city's population, numbering 23,929 people, which was nearly one-third of the residents.
President Woodrow Wilson opened the deep-water Port of Houston in 1914, seven years after digging began. By 1930, Houston had become Texas' most populous city and Harris County the most populous county. In 1940, the U.S. Census Bureau reported Houston's population as 77.5% white and 22.4% black.
When World War II started, tonnage levels at the port decreased and shipping activities were suspended; however, the war did provide economic benefits for the city. Petrochemical refineries and manufacturing plants were constructed along the ship channel because of the demand for petroleum and synthetic rubber products by the defense industry during the war. Ellington Field, initially built during World War I, was revitalized as an advanced training center for bombardiers and navigators. The Brown Shipbuilding Company was founded in 1942 to build ships for the U.S. Navy during World War II. Due to the boom in defense jobs, thousands of new workers migrated to the city, both blacks and whites competing for the higher-paying jobs. President Roosevelt had established a policy of nondiscrimination for defense contractors, and blacks gained some opportunities, especially in shipbuilding, although not without resistance from whites and increasing social tensions that erupted into occasional violence. Economic gains of blacks who entered defense industries continued in the postwar years.
In 1945, the M.D. Anderson Foundation formed the Texas Medical Center. After the war, Houston's economy reverted to being primarily port-driven. In 1948, the city annexed several unincorporated areas, more than doubling its size. Houston proper began to spread across the region.
In 1950, the availability of air conditioning provided impetus for many companies to relocate to Houston, where wages were lower than those in the North; this resulted in an economic boom and produced a key shift in the city's economy toward the energy sector.
The increased production of the expanded shipbuilding industry during World War II spurred Houston's growth, as did the establishment in 1961 of NASA's "Manned Spacecraft Center" (renamed the Lyndon B. Johnson Space Center in 1973). This was the stimulus for the development of the city's aerospace industry. The Astrodome, nicknamed the "Eighth Wonder of the World", opened in 1965 as the world's first indoor domed sports stadium.
During the late 1970s, Houston had a population boom as people from the Rust Belt states moved to Texas in large numbers. The new residents came for numerous employment opportunities in the petroleum industry, created as a result of the Arab oil embargo. With the increase in professional jobs, Houston has become a destination for many college-educated persons, including African Americans in a reverse Great Migration from northern areas.
In 1997, Houstonians elected Lee P. Brown as the city's first African American mayor.
In June 2001, Tropical Storm Allison dumped up to 40 inches (1,000 mm) of rain on parts of Houston, causing what was then the worst flooding in the city's history. The storm cost billions of dollars in damage and killed 20 people in Texas. By December of the same year, Houston-based energy company Enron collapsed into the largest U.S. bankruptcy (at that time), a result of being investigated for off-the-books partnerships which were allegedly used to hide debt and inflate profits. The company lost no less than $70 billion.
In August 2005, Houston became a shelter to more than 150,000 people from New Orleans, who evacuated from Hurricane Katrina. One month later, about 2.5 million Houston-area residents evacuated when Hurricane Rita approached the Gulf Coast, leaving little damage to the Houston area. This was the largest urban evacuation in the history of the United States. In September 2008, Houston was hit by Hurricane Ike. As many as 40% of residents refused to leave Galveston Island because they feared the type of traffic problems that had happened after Hurricane Rita.
During its recent history, Houston has flooded several times from heavy rainfall, which has been becoming increasingly common. This has been exacerbated by a lack of zoning laws, which allowed unregulated building of residential homes and other structures in flood-prone areas. During the floods in 2015 and 2016, each of which dropped at least a foot of rain, parts of the city were covered in several inches of water. Even worse flooding happened in late August 2017, when Hurricane Harvey stalled over southeastern Texas, much like Tropical Storm Allison did seventeen years earlier, causing severe flooding in the Houston area, with some areas receiving over 50 inches (1,300 mm) of rain. The rainfall exceeded 50 inches in several areas locally, breaking the national record for rainfall. The damage for the Houston area is estimated at up to $125 billion U.S. dollars, and it is considered to be one of the worst natural disasters in the history of the United States, with the death toll exceeding 70 people. On January 31, 2018, the Houston City Council agreed to forgive large water bills thousands of households faced in the aftermath of Hurricane Harvey, as Houston Public Works found 6,362 homeowners' water utility bills had at least doubled.