The community of Somerset was named for a settlement that had been begun in 1848, in what is now Atascosa County. It was founded by a group of seven Baptist families from Somerset, Kentucky, which had originally been settled by families from Somerset, England! The present site was named Somerset when the First Townsite Company was formed on the Artesian Belt Railroad right-of-way on May 25, 1909, by A. M. Pyron, Carl Kurz and Jonas A. Kerr.

In 1913, while drilling for artesian water, Mr. Kurz discovered oil and an oil boom followed. The Somerset oil field extended from Somerset to below Pleasanton and was then known as the largest shallow field in the world at that time. Two oil refineries in the field and a pipeline into San Antonio handled the high-gravity crude. Today, oil is still pumped in the area, though at a much reduced rate from the former peak of production. A nearby lignite coal mine also added to the booming economy of the area. The town grew rapidly from only fifty residents in 1925 to some 700 in 1928 and it was served by a state bank, a 10-room hotel, and several machine and blacksmith shops. A post office opened in 1920.

Somerset had a diverse economy and was known also for it agriculture, especially cotton. The During the 1920s, farmers turned from cotton to dryland fruit and vegetable farming. In 1931, the Somerset Fruit Growers Exchange building was dedicated, and between truck farming, oil, and coal, the town prospered until the mid-1930s, when diminishing oil returns and the Great Depression caused a decline. In 1931, the town reported twenty businesses; by 1958 there were only eight. Once the railroad bypassed Somerset and no longer made stops here, the town suffered economic hardship. The city of Somerset was incorporated in 1973 and has a mayor-council form of city government.

In 1922, the Somerset Independent School District (SISD) was formed from at least five other school districts: Wildman, Senior, Bexar, Old Rock (Old Somerset area), and Oak Island. Today, it occupies 85 square miles and is located in southwest Bexar County and northwest Atascosa County. With over 500+ employees on its payroll, SISD is the single largest employer in the community and currently has six school campuses- 4 within Somerset city limits and 2 within the area of Von Ormy. Despite being ranked as one of the poorest (economically) district in Texas, Somerset taxpayers are exceedingly generous when it comes to providing funds for education. Their approval of various bond issues over the years has ensured that the district remains current in educational facilities, educational programs, and educational opportunities for its students.

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