In 1887 the Katy built through the community and the original name, New Martindale, was changed to Maxwell, in honor of Thomas Maxwell, who obtained a grant in 1845 for the league of land on which the community stands. Maxwell's earliest settlers came primarily from Alabama and other states, but in the 1880s German groups arrived; their influence is still visible in the community. Mexican farmworkers added a second large component to the local population. Social life in early Maxwell centered on the dancing, singing, and shooting clubs traditional to German communities. The Maxwell Social Club was organized in 1953 to supervise athletic and recreational activities and to assist in welfare, relief, and other civic projects. The Maxwell post office was established in 1888. The population increased from twenty-five to 100 between 1890 and 1892, and the town acquired two general stores, a gristmill, and a gin. Fire almost destroyed Maxwell on three occasions-in 1887, in 1910, after which the town rebuilt its commercial area in brick, and in 1922. Maxwell had a population of 225, two churches, two general stores, two cotton gins, and a bank in 1914 and later three cotton gins, a restaurant, a physician, a drugstore, and numerous retail establishments. In 1929 the town had a population of 400 and eighteen businesses. It subsequently declined. In 1980 the community was the location for the filming of a movie, Raggedy Man, in which locals appeared in small roles. The Katy Railroad, purchased by the Union Pacific, opened new routes to San Marcos in 1989. In 1990 Maxwell had the post office, nine small businesses, and a population of 185. The population grew to 500 by 2000. The community's largest employer, the Nagle Manufacturing and Supply Company, manufactured coathangers.
On 30 July 2016, the town gained attention due to the 2016 Lockhart hot air balloon crash. The hot air balloon struck a power line near Maxwell, killing all 16 occupants aboard. The accident at Maxwell is currently the deadliest in the United States, and the second deadliest in the world.
There was a Methodistchurch in the community that was built in 1882 by Rev. Ulrich Steiner that was also used as a school. A Lutheran church was built to provide classes for teaching German and English in the community from 1886 to the early 1940s, as well as church services. A social club also provided educational assistance for the community. The community's earliest school was located three miles outside of Maxwell, and a school district called the Maxwell Common School District was formed. The campus was constructed with private subscriptions. It then became an independent school district in 1907, and the building only served African American students. There were three separate schools that served a combined total of 438 students. These students were White, Black, and Mexican. Today the community is served by the Lockhart Independent School District.
