Godley was established in 1886 and named for R. B. Godley, a Cleburne lumber merchant who donated an eight-acre tract for a townsite and twenty acres of land as a right-of-way to the Gulf, Colorado and Santa Fe Railway. A station was constructed in 1886. By 1888, when the post office opened, Godley had a gristmill, three cotton gins, and two dairy-processing plants. Four years later it had two general stores. By the mid-1920s the population was 613. In 1930 it was 378, and twenty-two rated businesses operated locally. In the 1940s the town had a population of 317 and twenty businesses. By 1956 it had a population of 424 and sixteen businesses, and by 1990 it had 569 people and twelve businesses.