Greenville was founded in 1846. The city was named after Thomas J. Green, a significant contributor to the establishment of the Texas Republic. He later became a member of the Congress of the Texas Republic. As the Civil War loomed, Greenville was divided over the issue of secession, as were several area towns and counties.

Greenville attorney and State Senator Martin D. Hart was a prominent Unionist. He formed a company of men who fought for the Union in Arkansas, even as other Greenville residents fought for the Confederacy. The divided nature of Greenville and Hunt County is noted by a historical marker in "The SPOT" Park at 2800 Lee Street in downtown Greenville.

In the post-Civil War era, Greenville's economy became partly dependent on cotton, as the local economy entered a period of transition.With a population of 12,384 in the 1920 census, the city was the 20th-largest city in Texas at the time. In World War II, the Mexican Escuadrón 201 was stationed in Greenville while training at nearby Majors Field. Greenville was notorious for a large sign, installed on July 7, 1921, over Lee Street, the main street in the downtown district, between the train station and the bus station in the 1920s to 1960s.

The sign read: "Welcome to Greenville, The Blackest Land, The Whitest People." According to history teacher Paul E. Sturdevant of Greenville, the original intent behind "the whitest people" was to define "the citizens of Greenville as friendly, trustworthy, and helpful was sincere, and it was meant to include all citizens, regardless of race." In pre-civil rights America, the phrase "That's mighty White of you" meant that you were honest, not like suspect Blacks.

The sign thus acquired racial overtones, and the original sign was taken down and placed into storage on April 13, 1965, possibly at the urging of Texas Governor John Connally, who had made a visit to the town weeks before. In 1968, Greenville's Sybil Maddux had the sign reinstalled, with the wording modified to read "The Greatest People"; the original sign is in the collection of the Audie Murphy American Cotton Museum.In 1957, Greenville annexed the small town of Peniel, which had been founded in 1899 as a Pentecostal Church of the Nazarene community centered around Texas Holiness University.

The annexation was approved by the citizens of Peniel, which at the time had a population around 157.On May 12, 2011, a white buffalo was born near Greenville during a thunderstorm on the ranch of Arby Littlesoldier, who identified himself as a great-great grandson of Sitting Bull. A public naming ceremony and dedication was held on June 29, 2011, during which the male calf was officially given the name "Lightning Medicine Cloud".

However, on August 21, 2012, Lightning Medicine Cloud died. The sheriff's department declared it had died from a bacterial infection, but the owners disagree, claiming that the buffalo was allegedly skinned by an unknown party.