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In 1833 William McFarland became alcalde, and citizens began to contemplate constructing a centrally located town. A committee of fifteen men chose the banks of the Ayish Bayou and then purchased the land from Edmund Quirk. The following year, under alcalde Charles Stanfield Taylor, the municipality of San Augustine was established by Mexican law. The name was chosen by Mexican officials, supposedly to honor St. Augustine of Hippo. Since the new district had 2,500 inhabitants in 1834, it could then officially elect an alcalde, two councilmen, a clerk, a chief justice and a primary judge.

Ayish Bayou settlers had been involved in the 1832 battle of Nacogdoches, in which they helped remove José de las Piedras, commandant of Nacogdoches. Subsequently, they sent prominent representatives, including Sam Houston in 1833, to the conventions of 1832 and 1833.  Early in 1836 Houston was elected commander of the Texian forces at San Augustine-and then for all of Texas-which took an active part in the Texas Revolution.

In April the town was abandoned when citizens fled toward the Louisiana border in the Runaway Scrape. They returned to their homes with news of the victory at the battle of San Jacinto. With the close of hostilities, Texans began establishing a government for the new Republic of Texas. San Augustine County was one of the first counties to be formed. In 1837 settlers chose county officials, including a chief justice, a county clerk, a sheriff, a district clerk, a surveyor, and a coroner. In most instances, war heroes were elected to those positions, replacing earlier settlers as community leaders.

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