Eldorado is located south of San Angelo toward Sonora along US 277, at US 190. It is the seat of Schleicher County.
The town grew quickly as a result of the land rushes that took place in Schleicher County between 1901 and 1905, and it thrived as a commercial center for area ranchers.
West Texas Woolen Mills was established in 1941, and Eldorado became the region's principal wool-processing center. Population estimates for the town reached a high of 2,790 in the mid-1960s, but the residents numbered fewer than 1,400 by the mid-1970s. Improved highways lessened the community's dependence on rail service, and the Atchison, Topeka and Santa Fe Railroad abandoned its track through Eldorado in 1976.
The population of Eldorado was estimated at 2,061 in 1982; in 1990 it was 2,019.