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Sunset Valley is a city in Travis County, Texas, United States. The population was 749 at the 2010 census. It is surrounded on all sides by the city of Austin.
Sunset Valley is located at 30°13′32″N 97°48′58″W (30.225631, -97.816133), 5 miles (8 km) southwest of downtown Austin.
According to the United States Census Bureau, the city has a total area of 1.4 square miles (3.6 km2), all of it land.
The first land transaction in the area dates back to 1835, but it wasn't until the early 1950s that the community of Sunset Valley was developed. It was at that time that two brothers, Clarence and M.H. Flournoy purchased a large tract of land for a residential subdivision. The landscape, a wooded valley nestled among rolling hills on the western edge of Austin, inspired the name Sunset Valley. In September 1954, Sunset Valley was incorporated as a town and established a mayor/council form of government. Clinton Vilven became the first mayor of the newly incorporated community.