In 1923, the
Texas Legislature directed the State Parks Board, a predecessor agency to today's
Texas Parks and Wildlife Department, to consider the Davis Mountains as the location of a new major destination park. After the parks board was initially unable to acquire appropriations or land donations for a park, the Legislature in 1927 instructed the Texas Highway Department, a TxDOT predecessor, to build the
Davis Mountains State Park Highway on donated right of way. On September 15, 1930, the effects of the
Great Depression finally encouraged local landowners to donate land for the proposed park to stimulate the local economy. The road had been designated on September 15, 1930, from Fort Davis as far as the Fowlkes Ranch enabling construction of nearby McDonald Observatory and Davis Mountains State Park. On April 24, 1933,
SH 166 Spur to Mount Locke observatory was added. By 1939, the route had been extended to make a complete loop around the highest portion of the Davis Mountains ending at its point of origin in Fort Davis. and SH 118 was extended over the northern portion of the highway to
Kent and over
SH 233 (which was cancelled) north of SH 166.
SH 166 Spur was renumbered as
Spur 78. On January 24, 1941, the route designation between Fort Davis and Nunn Hill was canceled with that stretch retaining its designation as SH 118. ==Route description==