In 1909, James Sims Wilson, a settler from Kentucky, established a ranch north of Pensacola and east of Grand River. The Missouri, Oklahoma & Gulf Railroad came to this area in 1912. Its right of way crossed the Wilson ranch, and Wilson began planning a townsite that would be served by the Pensacola post office. He filed the Pensacola townsite plat in the office of the county clerk on April 2, 1912. Despite failure of the town bank in 1921 and the onset of the Great Depression, the announcement of a new dam project five miles east, there was hope for growth to return. A chamber of commerce formed, and the town incorporated in 1938.