Dallastown was named after George M. Dallas of Philadelphia (Vice President of the United States during the Polk administration) during the presidential campaign of 1844. Dallastown was incorporated April 1866.

President Lyndon Johnson visited Dallastown in 1966 as part of the town's centennial celebration.

According to the United States Census Bureau, the borough has a total area of 0.8 square miles (2.1 km²), all of it land.

As of the census of 2000, there were 4,087 people, 1,622 households, and 1,026 families residing in the borough. The population density was 5,567.2 people per square mile (2,161.6/km²). There were 1,707 housing units at an average density of 2,325.2 per square mile (902.8/km²). The racial makeup of the borough was 97.19% White, 0.78% African American, 0.20% Native American, 0.34% Asian, 0.12% Pacific Islander, 0.39% from other races, and 0.98% from two or more races. Hispanic or Latino of any race were 1.79% of the population.

There were 1,622 households out of which 31.6% had children under the age of 18 living with them, 46.4% were married couples living together, 12.5% had a female householder with no husband present, and 36.7% were non-families. 29.8% of all households were made up of individuals and 12.4% had someone living alone who was 65 years of age or older. The average household size was 2.36 and the average family size was 2.91.

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