During World War II, Crystal City was home to the largest alien internment camp housing American civilians of German, Italian and Japanese ancestry, as well as enemy aliens of similar backgrounds. Additionally, Japanese, Italian and German civilians from South America were interned here.

In 1963, Crystal City, Texas was also the location where the first Mexican-American political revolt took place in Texas, as the Mexican-American majority elected fellow Mexican-Americans to the city council, led by Juan Cornejo, a local Teamsters Union business agent. Although these five elected officials known as "Los Cinco" only held office for two years, many consider this "spark" the starting point of what became known as the Chicano Movement.

In the late 1960s, Crystal City, Texas would become the location of continued civil rights activism among its Mexican-American majority population and the birthplace of the third party political movement known as La Raza Unida Party under the leadership of José Angel Gutiérrez. La Raza Unida and related organizations won election to most offices in Crystal City and Zavala County, Texas in the period between 1969 and 1980 when the party declined at the local level.

In the 1970s, following protests of charges on the part of La Raza Unida, Crystal City's natural gas supply was shut off by the supplier and Crystal City residents shifted to wood burning stoves, solar heat and power, and propane gas. To this day there is no natural gas in Crystal City, but most residents purchase propane from the city.

Early in its history the area known as the "Winter Garden District" was deemed the "Spinach Capital of the World." The first Spinach Festival was held in 1936. It was put on hold during World War II and later years. The Festival was resumed in 1982. The Spinach Festival is held to this day on the second weekend in November and draws former residents (many of them former migrant farm workers) from Michigan, Wisconsin, Minnesota, California, Washington State and beyond.

Tomas Rivera, noted author, poet and educator hailed from Crystal City. Rivera is buried at the Benito Juarez Cemetery. He and Gutierrez are the city's most famous and notable former residents. Rivera's youngest brother, Antonio Rivera is a local physician.