Carthage is at the intersection of U.S. highways 59 and 79, forty-two miles west of Shreveport, Louisiana, near the center of Panola County. Carthage is Panola County's second county seat. When an act of the Texas legislature delineated the county in 1846, the temporary county seat was Pulaski, a settlement on the east bank of the Sabine River. In 1848 the county commissioners selected a site at the county's geographic center as the permanent county seat. Jonathan Anderson, who owned the proposed site, agreed to donate 100 acres for the town. Spearman Holland is credited with naming the community in honor of Carthage, Mississippi. A post office was established in 1849. The first courthouse, made of peeled pine logs and financed by the sale of town lots, was completed in August of the same year. The log courthouse was used until 1853, when a brick structure was built. In 1860 Carthage had a school, a church, and the Panola Male and Female Academy, founded by L. C. Libby. The courthouse soon became overcrowded, and a third courthouse, built in Gothic style, was completed in 1885. By that time a local newspaper, the Panola Watchman, was being published by T. E. Boren, and a second weekly, the Panola Banner, published by G. D. Guest and H. M. Knight, was in operation by 1890. In 1888 the Texas, Sabine Valley and Northwestern Railway was extended to Carthage. This line later became part of the Gulf, Colorado and Santa Fe and in 1965 was conveyed to the Atchison, Topeka and Santa Fe.
Carthage was incorporated in 1874, but it soon reverted to management by the county court. In 1902 the community was incorporated under the council form, but it later dissolved again. In 1913 the town adopted the commission form of government, still in place today, which consists of a mayor, a city manager, and city commissioners. In 1953 a brick courthouse was dedicated on Sycamore Street, two blocks west of the old site on Carthage Square. The old courthouse was auctioned off and the square cleared for a public park, named for Jonathan Anderson, in 1956. In 1920 Carthage had a population of 1,366. The community expanded steadily afterward, spurred by the growth of the oil and gas industry and general commerce in the area. In 1940 the population had risen to 2,178, and by 1980 it had reached 6,477. The town had a shopping mall and a renovated downtown, as well as a cup company and a chicken-processing plant. In 1990 the population was 6,496, and in 2000 it was 6,664.