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Port Mansfield started out as a small fishing village on Red Fish Bay, twenty-seven miles east of Raymondville. Charlie Johnson, an area developer, started promoting Red Fish Bay by building very substantial wharves into the bay.

In 1948, a navigation district was created to take advantage of the Laguna Madre Bay. In 1950, the town was named Port Mansfield to honor Texas Congressman Joseph J. Mansfield who served as Chairman of the House River and Harbors Committee and had pushed and worked for legislation creating the intracoastal canal from Corpus Christi to Brownsville. In 1954, a canal was dredged across Padre Island, opening Red Fish Bay to Laguna Madre. The channel was deepened in 1962 and a Coast Guard facility was built as an aid to navigation.

Hurricane Allen passed over the town in 1980 with 100 mile an hour winds and a storm surge tide of ten feet. With all the damage, it did not deter the growth of the town. It has become one of the top ten fishing areas of the U.S. with a well-known annual fishing tournament. It's surrounding salt flats and small spoil islands create an ideal condition for many migratory birds and is a favorite among many bird watchers.