The town, in what is now Wagoner County, Oklahoma, began in 1850, when the Creek Nation constructed a school there, the Tullahassee Mission School.

The name for Tullahassee is derived from two Native American words: “tulwa” meaning town and “ahassee” meaning something old.

By the early 1880s, the population of freedmen had increased in the area, while the number of Native Americans had declined after a fire gutted the school. At that point, the Creek Council transferred the Creek children to another school and gave the town of Tullahassee to the freedmen. A post office opened in 1899, and the town was incorporated in 1902. It is considered the oldest of the surviving all-black towns.

The Missouri, Kansas and Texas Railway ran through the town, also attracting hundreds of settlers. In 1916, the African Methodist Episcopal Church (AME) opened Flipper Davis College in the old Tullahassee Mission building. The college was the only private higher level education institution for African Americans in Oklahoma. This school closed in 1935.