Beginning in the 1850s, the first settlers began receiving land grants for Preston Hollow’s land. Among them were the Lively family on Guernsey Lane, the Howell family, and the Meaders family. Other smaller farms, such as the dairy farm at 6303 Meadow, were also in Preston Hollow.
In the 1920s, the first people started moving to Preston Hollow for residential purposes. Ralph Stichter was the first, purchasing many acres at the northeast corner of Preston and Walnut Hill. He built two estates on his property, one right at the corner and another at what is now 6126 Lakehurst, which still stands, in 1922.
That same year, real estate developer Ira P. DeLoache first noticed the area. In 1924, DeLoache bought a 56-acre (23 ha) farm; Preston Hollow's first lots were carved out of the former farm parcels. He built his real estate office at what is now Ebby’s Little White House in 1926. DeLoache and Al Joyce developed Preston Hollow, with development mainly occurring in the 1930s. Famous architect Charles Dilbeck designed many monumental homes throughout the neighborhood in the 1930s and early 1940s. At first, Preston Road was the area's only connection to Downtown Dallas. Terry Box of The Dallas Morning News said that the Northwest Highway "was nothing more than muddy right of way." The area that would later become Preston Center was a dairy farm in the early to mid-20th Century.
The developers intended Preston Hollow to be what Box said was "more than a flatland suburb on the fringes of a new and growing Dallas." Doctors, entrepreneurs, industrialists, lawyers, and oil businesspeople moved to Preston Hollow. Many built country-style estates that housed horses and stables. A private school which later became St. Mark's School of Texas opened in the area.