Panola County sits on the Texas-Louisiana border bounded by Harrison County to the north, Shelby County to the south, and Rusk County to the west. At various times in the 18th and 19th centuries the area that became Panola County was contested ground between European and American powers. The Tejas are indigenous to the area. The first Anglo settlers arrived in 1833 and 1835.
Panola County broke off from Shelby and Harrison counties in 1846. The first county seat was Pulaski but it was moved within two years to Carthage. The name Panola was taken from the Native American word "ponolo," meaning cotton.