Pflugerville was founded in 1860 when William Bohls established a general store and post office in his residence, and named the town in honor of Henry Pfluger, who had settled in the area in 1853. Two additional buildings and a blacksmith shop were added later, but it was not until the railroad arrived in 1904 that the town experienced a period of rapid growth.

Located about fifteen miles north of the Colorado River on the eastern edge of the blackland prairies, the town also served the area's farmers who brought their cotton crops to Pflugerville's gins. Otto Pfluger, one of Henry Pfluger's eight sons, built the first gin in 1904. A second gin was erected in 1909.

The town's prosperity attracted additional business concerns. Otto Pfluger added an ice factory next to his gin. In 1913 H.H. Pfluger built the Sky Dome Theater which showed motion pictures to the accompaniment of a player piano, on Friday and Saturday nights. The theater closed in 1928.

The Depression halted the community's growth, as citizens moved to larger cities to find work. Pflugerville was incorporated in 1965. In the late 1970s and early 1980s, as the city of Austin experienced tremendous growth, Pflugerville's boundaries, like Round Rock's, expanded to blend with those of Austin's northern city limits.