Grayson is one of several counties created from Fannin County in 1846, in the first legislature of the State of Texas. On March 17, 1846, Grayson County, named for Peter W. Grayson, attorney general of the Republic of Texas, was marked off from Fannin County.
The legislative action also specified that the county seat be called Sherman.The naming of the county seat in honor of General Sidney Sherman was apparently an effort to effect a compromise between supporters of Sherman, an anti-Houston Whig, and Grayson, a pro-Houston Democrat.
Each county created from Fannin is approximately the same size, with the center and county seat, of each being about 15 miles from the county line, or about 30 miles from each other. This was at the suggestion of Collin McKinney so that citizens could travel to their county seat, about 15 to 20 miles, and back home in one day from anywhere in the county.