The town's early history is closely tied with the Texas revolution. Velasco was an important entry point for American settlers in Texas. In 1836 following the decisive battle of San Jacinto, Velasco was made the first capital of the Republic of Texas by President David G. Burnet. In fact, five towns in Texas held that honor until Austin was finally chosen.
With an estimated population of 4,000 in 1956, Velasco was incorporated with Freeport, Texas, on July 27, 1957. The community then became part of the Brazosport port and industrial area and the Brazosport Independent School District.