The area was settled in the 1830s on the banks of the Colorado River by pioneers who named the village Waterloo. In 1839, Waterloo was chosen to become the capital of the newly independent Republic of Texas. The city was renamed after Stephen F. Austin, known as the father of Texas. The city grew throughout the 19th century and became a center for government and education with the construction of the Texas State Capitol and the University of Texas. After a lull in growth from the Great Depression, Austin resumed its development into a major city in the 1980s and emerged as a center for technology and business. Today, the Greater Austin area is home to many companies, high-tech and otherwise, including the headquarters of four Fortune 500 corporations: Whole Foods Market, Freescale Semiconductor, Forestar Group, and Dell. On March 12, 2010, Facebook accepted a grant to build a downtown office that could bring as many as 200 jobs to the city.

Residents of Austin are known as "Austinites" and include a diverse mix of university professors, students, politicians, musicians, state employees, high-tech workers, blue-collar workers, and white-collar workers. The main campus of the University of Texas is located in Austin. The city is home to development centers for many technology corporations and in the high-tech 1990's adopted the nickname "Silicon Hills". However, the current official slogan promotes Austin as "The Live Music Capital of the World", a reference to the many musicians and live music venues within the area. In recent years, many Austinites have also adopted the unofficial slogan "Keep Austin Weird"; this refers partly to the eclectic and liberal lifestyle of many Austin residents but is also the slogan for a campaign to preserve smaller local businesses. Long ago, Austin also became known as the city of the "Violet Crown" for the wintertime violet glow of color across the hills just after sunset. Even today, many Austin businesses use the term "violet crown" in their name.