Palacios ( pə-LASH-əs) is a city in Matagorda County, Texas, United States. The population was 4,718 at the 2010 census. The native inhabitants of the region were the Karankawa people, whose initial contact with Europeans came in the 16th century when Spanish expeditions first traversed their territory. In 1685, the area was explored by René-Robert Cavelier, Sieur de La Salle, the leader of an ill-fated French settlement attempt whose flagship La Belle was wrecked in the bay the following year. In the 1820s, English-speaking settlers arrived and came into frequent conflict with the Karankawa, who were eventually driven out of the area.
The future site of Palacios was ranch land until 1901, when it was put up for sale by the estate of the former owner, Abel “Shanghai” Pierce. The land was purchased by a development company, surveyed into lots, and with the arrival of the Southern Pacific Railroad and the establishment of the Texas Baptist Encampment, it rapidly grew into a seaside resort town. It was first settled as a community in 1903. City government was established in 1909, and by 1915, Palacios was home to more than 100 businesses, with a post office, library, weekly newspaper, numerous hotels, and churches, as well as a large entertainment pavilion built on a pier in the bay.
information provided by wikipedia.org