The present location of Weslaco was originally part of the Llano Grande land grant to Juan José Ynojosa de Ballí in 1790. After Ynojosa's death, the grant was allocated to his children. Manuela and María received the land on which Weslaco is located today. The Ballí family ranched and maintained ownership of the land until 1852. In 1904, the Hidalgo and San Miguel extension of the St. Louis, Brownsville and Mexico Railway made its way to the site. It was promoted by Uriah Lott, Lon C. Hill, Jr., and others interested in developing the area through farming as opposed to ranching. The American Rio Grande Land and Irrigation Company of neighboring Mercedes purchased a major portion of the Llano Grande grant and platted the West Tract in 1913. In an effort to control raids from Mexico, the United States government stationed troops along the Rio Grande in 1916. A camp was established at the Llano Grande railroad depot. This camp was located between Mercedes and the current site of Weslaco. A watchtower was constructed at Progreso by these troops.
On December 14, 1917, the irrigation company sold 30,000 acres (12,000 ha) at ninety dollars an acre to the W. E. Stewart Land Company. The town name "Weslaco" was derived from the company's name. The Stewart Company later sold the townsite to Ed C. Couch, Dan R. Couch, R. C. Couch, and R. L. Reeves. The site was surveyed and platted on September 18, 1919, by H. E. Bennett, a civil engineer hired by Ed Couch and R. L. Reeves, whose partners, fearing failure, had backed out of the venture. Nearby communities circulated flyers discouraging settlement at the proposed town. Nevertheless, the sale of lots was held on December 8–10, 1919. Prices ranged from $50 to $400 per lot. To make a claim, individuals had to choose a lot and camp on it until the day of the sale. Lots were given away free to church groups. Three cars were also given away as a promotion during the sale.