Spicewood is a mile north of State Highway 71 and nine miles southeast of Marble Falls in southeastern Burnet County. It was probably named for the spicewood timber on nearby Little Cypress Creek.

A post office opened at Spicewood in 1899 with James B. Pangle as postmaster. Nearby communities, such as Corwin, Clover, and Rockvale in southern Burnet County and Haynie Flat in western Travis County, began using the Spicewood post office; as these small communities declined in the late nineteenth and early twentieth centuries, many of their residents turned to Spicewood as the focus of community life.

In 1919 Spicewood replaced Rockvale as the official name of the local school district. By the mid-1920s the community had about 100 residents; that number had risen to 125 by 1933. Spicewood businesses prospered when Farm Road 93 (later State Highway 71) was built through the area in the 1940s; several businesses and scattered houses marked the community on county highway maps at that time.

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