Texline, on U.S. Highway 87 eleven miles southeast of Clayton, New Mexico, in western Dallam County, is named for its location on the Texas-New Mexico line. It began when the Fort Worth and Denver City Railway purchased land from the Capitol Freehold Land and Investment Companyqv and built a division point there for its line in 1888. By the end of that year the town had a post office, a hotel, a depot, and railroad shops. Charles F. Rudolph,qv editor of the Tascosa Pioneer, predicted that Texline would be "the wildest and the roughest and the toughest town of this section," and for a time his prediction was right.

Texline served as the Dallam county seat from 1891 to 1903, when the county government was moved to Dalhart. The county's first public school was begun in Texline about 1892. Charles W. French, an agent for the Panhandle Land Improvement Company, described the boom days and the hardships that his family and other area homesteaders endured due to the lack of adequate medical treatment (until 1907, the nearest doctor was in Clayton) and occasional fuel shortages. Often the only fuel available was coal, which local residents purchased from the railroad. The town was incorporated in 1916, but removal of the railroad shops in 1923 caused population to decrease to 385 by 1940. Nevertheless, Texline retained some twenty-five businesses and several churches. By 1984 the population was 477. In 1990 the population was 425.