McAllen is the twentieth most populous city in Texas as well as largest city in Hidalgo County, Texas, United States. It is located at the southern tip of Texas in an area known as the Rio Grande Valley and is part of the . Its southern boundary is located on the Rio Grande River across the Mexican city of Reynosa, the Rio Grande, and about west of South Padre Island and the Gulf of Mexico. The 2010 census put the city's population at 129,877 and the McAllen–Edinburg–Mission metropolitan area at 774,769. The Reynosa–McAllen Metropolitan Area counts with a population of nearly 1.7 million. Although the area around McAllen was largely rural in character dependent on agriculture for much of its history since it was settled in 1904, the latter half of the 20th century was marked by steady growth that accelerated during the 1980s and led to an economic and population boom in the 1990s and 2000s. Today the McAllen–Edinburg–Mission metropolitan area is one of the fastest growing metropolitan areas in the United States, although most of its growth was from surrounding smaller cities. The introduction of the maquiladora economy and the North American Free Trade Association led to a boom in international trade, cross-border commerce with Mexico and health care. McAllen's Medicare spending per capita has attracted national scrutiny due to a sharp increase from a national average in 1992 to a near national high by 2006.
McAllen is a regional retail destination for Northeastern Mexican states. While McAllen's total population is 20th among Texas cities, it ranked 12th in overall retail sales, and third in the State in total retail sales per household and per capita.
McAllen is situated on land that was part of porciones 63 and 64, granted respectively by Spain to Antonio Gutiérrez and Juan Antonio Villareal in 1767. Gutiérrez and his heirs inhabited the land at least up to 1883, and Villareal's heirs lived on his land for at least fifty years prior to 1852. The Santa Anita Ranch was established around 1797 by José Manuel Gómez, who received the land grant from Spain in 1800. He raised cattle, sheep, goats, and horses on his ranch and helped to continue colonizing the area. His great-granddaughter Salomé Ballí, who inherited the land in the early 1800s, married John Young, a Brownsville businessman in about 1848. They proceeded to acquire land in the surrounding area, and in 1852 Young applied for porciones 64 and 65 in southern Hidalgo County. Young died in 1859, leaving his holdings to his widow and son, John J. Young, with John McAllen, Young's assistant, as manager. McAllen married Salomé Ballí de Young in 1861, and in 1862 they had a son, James Ballí McAllen. They continued adding land to the ranch, which was renamed the McAllen Ranch. The site of present-day McAllen was within the ranch's boundaries.
By 1903 there were scattered ranches in the area, and in March of that year the Hidalgo Irrigation Company was organized. By the next year, the Hidalgo and San Miguel Extension (now the Sam Fordyce Branch) of the St. Louis, Brownsville and Mexico Railway reached the Santa Anita Ranch. John McAllen and his son James donated land to have the railroad cross their land. On December 5, 1904, the McAllen Townsite Company was formed by Uriah Lott, Leonidas C. Hill, Sr., John McAllen, James Ballí McAllen, and John J. Young. The new community, which was named for John McAllen, had the depot nearest to the county seat, Hidalgo, eight miles to the south.
By 1911, 5,000 acres was under cultivation in East McAllen with produce consisting of cotton, alfalfa, broom corn, citrus fruits, grapes, and figs. East McAllen had an estimated population of 1,000 that year, and West McAllen had ceased to exist. In 1911 the town applied for and was issued a charter of incorporation under the name McAllen. In 1916, 20,000 New York state troops were stationed at McAllen to help with border disturbances. The resulting economic boom increased the population from 1,200 in 1916 to 6,000 in 1920.
McAllen adopted a home rule charter in 1927. Canning factories, a winery, tortilla plants, wood-working plants, and some oil exploration increased the population to 9,074 by 1930. In 1936 Hiram Garner opened the Valley Distillery, Incorporated, which produced wines from citrus juices. The town was a petroleum and farm chemurgic center with a population of 11,877 in 1940, by which time it had adopted the nickname the City of Palms. In 1941, a suspension bridge replaced the old bridge to Reynosa, Tamaulipas, Tamaulipas; the new toll bridge was purchased by the city and was officially called the McAllen-Hidalgo-Reynosa International Bridge. Its construction resulted in an increased tourist trade that made McAllen a winter resort and port of entry to Mexico. Oil discovered in the Reynosa area in 1947 resulted in a large migration of people from the Mexican interior that constituted a new tourist market and cheap labor supply for McAllen. The sister cities were linked as a result of the increased traffic between them. The population of McAllen was 20,005 in 1950 and 32,728 in 1960. The McAllen-Hidalgo-Reynosa International Bridge was the number-two port of entry into Mexico in 1954.
McAllen was an agricultural, oil, and tourist center in 1970, when the population reached 37,636. By the start of the 1970s, McAllen had a 200-bed hospital and a new air-conditioned high school, the first school in the nation featuring on-site power generated by natural-gas-powered turbines. The tourism industry continued to expand as people traveled to the area from both Mexico and the northern United States. The population continued to grow steadily through the 1970s, and reached 66,281 by 1980. During the late 1980s the McAllen Foreign Trade Zone was an important general-purpose foreign trade zone. At the time McAllen’s main industries were retail, tourism and farming, and each was in trouble. The devaluation of the Mexican peso in the 1980s put a damper on cross-border shopping; local tourism was down because of the recession. In 1983 a freeze took out much of the Valley’s citrus crop.
In the mid-1980s, fueled by trade and the growth of the maquiladora (in which components are shipped to Mexico, assembled and shipped back), things began to pick up in Hidalgo County. McAllen sits across the border from Reynosa, a large manufacturing centre. After the peso devalued it became easier to woo companies to put their plants in Mexico with support operations in Texas. Workers came for jobs, winter Texans returned to enjoy the sun and Mexicans came to spend money. Thanks to tourist dollars, McAllen has the highest retail spending per capita in the state, says its Chamber of Commerce. The result was unprecedented growth, and Hidalgo County’s population soared from about 280,000 people in 1980 to over 700,000 in 2007.