As the county seat of Madison County, Madisonville is located on a league of land granted by the Mexican government to Job Starks Collard, a member of Stephen F. Austin's Colony. In 1854, Collard donated 200 acres of land for the county seat. Both the county and city are named for President James Madison.
Madisonville is located at the crossroads of I-45 and Texas 75 which runs north-south, and historic Texas 21 (El Camino Real) which runs east-west from Natchitoches, Louisianna, on to Mexico City. The city is a center for agriculture trade as well as diversified industry. Some 400,000 pounds of fresh mushrooms are produced weekly at Monterey Mushrooms, Inc. The fresh mushrooms are harvested, packed and distributed to commercial centers in Texas and other states.