Established in 1865, the city was originally known as Darlington. Dilley is in southern Frio County on I-35 and the International-Great Northern Railroad. Agriculture and ranching are economic mainstays here, and the city is known for its sweet, juicy watermelons. Also grown in the area are peanuts, tomatoes, spinach grain sorghum and cotton. During the 1980s the area experienced another oil boom with the invention of horizontal drilling. Oil production and oilfield services continue to contribute to the economy.

Ornate downtown buildings are examples of the 1920s era. Dilley is on the central flyway of migratory birds and birdwatchers have documented more than 250 species. Bird lists and maps are available at the chamber of commerce office. During season, hunts take white-tailed deer, dove, quail, javelina and turkey. Fishing is also popular in the Frio River.