The town was named after Dr. G.S.B. Hempstead from Portsmouth, Ohio. An oil painting of Doctor Hempstead is on display in the Hempstead Library.
Hempstead is famous for its watermelon crop, and until the 1940s the town was the top shipper of watermelons in the United States. Billy DiIorio was known as the Watermelon King and Angelina DiIorio was known as the Watermelon Queen. Both resided in Hempstead, Texas. The town holds an annual Watermelon Festival in July.