In the early 1840s, several settlers came to the area around Plano. Several nearby facilities including a sawmill, gristmill and a store brought more people to the area. Mail service was established and after rejecting several names for the budding town (including naming it in honor of then-President Millard Fillmore), the locals suggested the name Plano, from the Spanish word for "flat," a reference to the terrain of the area. The name was accepted by the Post Office and Plano was born.

In 1872, the completion of the Houston and Texas Railroad helped the city to grow, increasing the population to more than 500 by 1874. In 1873, the city officially incorporated.

In 1881, a fire raged through the central business district, destroying most of the buildings: 51 in all. However, the town was rebuilt and business again flourished through the 1880s. In 1895 the PISD (Plano Independent School District) was formed.

Unlike many of the other Dallas suburbs, which were closer to Dallas itself, the population of Plano initially grew slowly, reaching 1,304 in 1900 and increasing to 3,695 in 1960. By 1970, however, Plano began to feel some of the boom its neighbors experienced following World War II.  A series of public works projects and a change in taxes that removed the farming community from the town helped to increase the overall population of Plano. In 1970, the population reached 17,872 and by 1980, the population had exploded to 72,000 people. Almost unbelievably the sewers, schools and street development kept easy pace with this massive increase largely due to Plano's flat topography, grid layout and effective planning.

During the 1980s, many large corporations moved their headquarters to Plano, including JCPenney and Frito-Lay, which helped to further grow the city as more people desired to move closer to where they worked. By 1990, the population had reached 128,713 and now dwarfed the county seat of McKinney.  In 1994, the city was recognized as an All-America City.

By 2000, the population nearly doubled again to 222,030, making it one of the largest suburbs in the Dallas area. However, the area's suburban sprawl has pushed beyond Plano and the city's population is stabilizing. Plano is completely locked in by other municipalities and cannot expand in area, and there is little undeveloped land remaining within the city limits. By 2005, its population was estimated to be 250,096.

Plano's parks feature many playgrounds, several bicycling trails, and a nature preserve. The bike trails take advantage of several contiguous parks to extend their range. One runs northwest-southeast, beginning at Legacy Drive east of Independence in Chisolm Trail Park and running to Alma Drive south of Parker at the terminus of the park. The trail diverges near Spring Creek Pkwy & Custer Rd leading to another outlet on Alma, this time north of Spring Creek terminating at High Point Park. Another trail originates in Carpenter Park which is north of Spring Creek on Coit Rd running both east-west and north-south. The north-south path terminates south of Park Boulevard just west of Coit Road, while the east-west path terminates at Bronze Leaf Dr in Lone Star Park.

Bob Woodruff Park, which has its north-west corner at Spring Creek Pkwy & Parker Rd and extends south of Park & east to Los Rios Blvd, features one of the largest playgrounds in Plano. Oak Point Park is Plano's largest park, in area.

The Arbor Hills Nature Preserve is located west of the Dallas North Tollway on Parker Rd. It features a shared pedestrian and bicycling trail which highlights the assets of the preserve, and the woods within the preserve are traversed by several unpaved trails.

There are three senior high schools (grades 11-12) in PISD; Plano East, Plano Senior and Plano West.

In 2006, Plano Independent School District announced that 115 seniors were selected as National Merit Semifinalists, the largest in the district's history.

There were 80,875 households out of which 42.0% had children under the age of 18 living with them, 64.3% were married couples living together, 7.5% had a female householder with no husband present, and 25.1% were non-families. 20.2% of all households were made up of individuals and 2.9% had someone living alone who was 65 years of age or older. The average household size was 2.73 and the average family size was 3.18.

In the city the population was spread out with 28.7% under the age of 18, 7.0% from 18 to 24, 36.5% from 25 to 44, 22.9% from 45 to 64, and 4.9% who were 65 years of age or older. The median age was 34 years. For every 100 females there were 99.3 males. For every 100 females age 18 and over, there were 97.2 males.

According to a 2006 estimate, the median income for a household in the city was $77,038, and the median income for a family was $106,335.  Males had a median income of $64,668 versus $39,617 for females. The per capita income for the city was $36,514. About 3.0% of families and 4.3% of the population were below the poverty line, including 4.6% of those under age 18 and 7.8% of those age 65 or over. Average rents in Plano in 2005 were $662 for a one bedroom apartment, and $878 for a two bedroom apartment.

Plano was the highest income place with a population of 130,000 or more in 2000.

Plano was ranked the most affluent city in the United States with the lowest poverty rate of 6.3% for a city with a population exceeding 250,000. Its neighbor, Frisco, was ranked the richest city for the population of under 250,000 in the United States with a 2.7% poverty rate. Plano also has the highest median income in the nation at $71,000.