In January 1844, Republic of Texas President Sam Houston granted two tracts of land to Charles F. Mercer for the settlement of families, including 6,500 square miles around this site within Mercer's colony. Among the earliest settlers were members of Concord Missionary Baptist Church, organized in August 1844 by the Reverend Benjamin Watson on a site that later became Shady Grove Cemetery, and a log structure was soon erected for both church and school use. The Greenville Post Office, which probably served the community, was established in 1847, and in 1852 Watson and James A. Burnett deeded one acre to the Concord church. Watson also built the first flour mill in Hunt County in 1849. In the final days of the Civil War, James S. and Elizabeth Alexander settled here with their family and gave land for a new schoolhouse. James Burnett voted to name it Alexander for its benefactors, but others preferred Shady Grove for the many large shade trees nearby, and the community adopted the school's name. The Alexanders also built a cotton gin, corn mill, and blacksmith shop, while a post office, store, and Watson's flour mill completed the village business section. Shady Grove Methodist Church was built in 1885 with the Reverend W. S. May as pastor, and Shady Grove Baptist Church was organized in 1888. The Shady Grove schoolhouse closed in 1918 when the area was consolidated with Moore's Prairie schools, and the Baptist church remained active in 1999 as part of the history of Hunt County.