German immigrant farmers were the first settlers of this area, which was originally called Goodwin. Henry D. Gruene established a large cotton farming operation here in the 1870s. He built a mercantile, cotton gin and dance hall, and conveyed land for a school. The town became known as Gruene in 1903. A boll weevil infestation destroyed the cotton crop in 1925 and signaled the decline of the town. Restoration efforts begun in the 1970s revitalized the area. The town was listed in the National Register of Historic Places in 1975.