As the smallest municipality in the province, Anao covers a total land area of 2,387 hectares (5,900 acres). The area occupied by the municipality was formerly a part of Pangasinan. It is 34 kilometres (21 mi) east of the provincial capitol and nestling on the Tarlac-Nueva Ecija border. Located in the north-eastern part of Tarlac, it is bounded on the north by San Manuel, in the east by Nampicuan, on the south by the Ramos and on the west by the Paniqui and Moncada.
The area where Anao is located was inhabited before 1800 by people from the Ilocos Region. In 1835, a group of immigrants from Paoay, Ilocos Norte reached the region and first settled near a creek on the bank where there were balete trees. These immigrants called their settlement "Balete". The immigrants found that the region where they settled has many agricultural prospects and this attracted more immigrants who came from the north, especially from the town of Paoay. The settlement expanded and became a barrio named Balete which later changed to Barrio Anao deriving from the Ilocano word "Danao" which means creek. By that time, balete trees were extinguished and the barrio was adjacent in all directions by creeks. Paniqui then stood as one municipality and had a road extended toward the east to Barrio Anao. Paniqui had more rights to claim Anao as its barrio and the people of the barrio accepted the claim.
In the center of the town near the Municipio or Presidencia is the (F-1935) Saint John Nepomucene Parish Church of Anao. Fr. Mike Marquez and Father Ricky Barayoga are its Parish Priest. It belongs to the Roman Catholic Diocese of Tarlac at Poblacion St., Anao 2310 Tarlac, Philippines, Titular: St. John Nepomucene, Feast on May 16 under the Vicariate of St. Rose of Lima.