Nicknamed the "Southern Part of Heaven," Chapel Hill was named after New Hope Chapel which stood upon a hill at the crossing of two primary roads (where The Carolina Inn currently stands).
The history of the Town is inextricably linked to the University of North Carolina. The Town was, in fact, created to serve the University. When the University of North Carolina Board of Trustees chose the area around New Hope Chapel as the site for the first State university in 1793, they also named a committee to lay out a town adjacent to the site.
The original map of the Town, drawn in 1798, shows 24 two-acre lots and six four-acre lots wrapping around the northern, western, and eastern fringes of the campus. These 30 parcels, sold at public auction to the highest bidder, were squared off along six streets including a proposed 290-foot-wide "Grand Avenue" running out of the campus through what is now Henderson Street and the Cobb Terrace area.
By 1859, the Town covered 820 acres forming a rectangle bounded roughly by Sunset Drive, Penick Lane, Tenney Circle and Gimghoul Road. The Town retained these boundaries for almost a century with the first modern annexation taking place in 1950, bringing in the Northside school (currently known as the Orange County Multi-Purpose Center on Caldwell Street Ext.) and 275 acres known locally as the Strowd Hill area. Annexation since then has proceeded at a steady pace, and the Town now encompasses about 21 square miles.
Source: Town of Chapel Hill