Penelope was named after the daughter of the president of the International-Great Northern Railroad (Smith Land Improvement Company), Penelope Trice, in 1902 when tracks of the International-Great Northern Railroad reached the area. In the early 1890s, the Seley family established the Zee Vee Ranch a half mile from the town's present site which is on Farm Road 308 fifteen miles south of Hillsboro in south central Hill County. Specifically, it is 4 miles (6 km) southwest of Malone and 20 miles (32 km) southeast of Hillsboro, the county seat. A post office was also opened in 1902 and many Czech families relocated into the town. The town was incorporated in 1913. With a total area of 1.0 square mile, they reached a population of 202 in 2017. Also, the town is served by the Penelope Independent School District and is home to the Penelope High School Wolverines.
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