In December 1845, Texas was annexed into the Union. The first State Legislature organized several new counties, one of which was Grayson County. It was created from a part of Fannin County and authorized on November 17, 1846. Grayson County was named for Peter W. Grayson, who was attorney general in President Burnett’s Cabinet in 1836. Grayson was one of the signers of the treaty with Santa Ana. He was sent by President Burnett to Washington as one of the commissioners to obtain recognition on the part of the United States and seek friendly mediation and assistance in obtaining recognition from Mexico toward the independence of Texas as a republic.
Sherman was founded in 1846 by the Grayson County commissioners. It was located in the center of the county, four miles west of its present site, near highways 56 and 289. Because of a lack of wood and water, the town was moved in 1848 to its present site. Sherman, the county seat of Grayson County, was named after General Sidney Sherman, a hero of the Texas Revolution. Sherman was the captain of a volunteer company in the Kentucky State Militia. He raised a unit of 50 armed men and came to Texas to present himself to General Sam Houston. The regiment arrived too late to fight at the Alamo; however, at the decisive battle of San Jacinto, Sherman commanded the left wing of Houston’s army. He led his regiment with the now famous battle cry, “Remember the Alamo! Remember Goliad!” Sherman and his family moved to Texas permanently in 1837 and settled in Houston. In 1842, he served as a representative in the Congress of the New Republic of Texas. In 1852 and 1853, after Texas joined the Union, he served in the State Legislature. Sidney Sherman is also remembered for building the Buffalo Bayou, Brazos and Colorado Railway, which was the first railroad in the state and the original unit of the Southern Pacific System in Texas.