Buda was formally established on April 1, 1881, when Mrs. Cornelia Trimble donated land for a townsite at an International-Great Northland Railroad depot there. The area had earlier been settled as part of a Mexican land grant. A common explanation for the name is that it derives from the Spanish word, viuda, meaning widow. The town had gathered a reputation as a popular eating stop for rail travelers and the name may refer to a pair of widows who cooked at the establishment in the late 1800s.
Only 17 miles from Austin on I-35, the town's growth has paralleled Austin's growth since the 1980s. Many original buildings along Main St. now house antique shops and related businesses, including a popular Farmers Market (May - Nov.).