Fallon's family moved to Canada when he was a child. When he was 18, he moved to Texas, where he joined the third expedition of John C. Frémont to Alta California. Early in 1846, Fallon stayed in Santa Cruz after Frémont visited the area. In June 1846 he joined the Bear Flag Revolt, raised a group of 22 volunteers in Santa Cruz, and appointed himself captain. The force crossed the Santa Cruz Mountains to capture the Pueblo of San José without bloodshed, on July 11. On July 14, 1846 he received an American Flag from Commodore John D. Sloat, which he raised over the juzgado of San Jose, the pueblo's administrative building. Fallon's force then joined Fremont's California Battalion for the remainder of the Mexican-American War.
After the war, Fallon returned briefly to San Jose, then back to Santa Cruz where he established a business as a saddler. At the beginning of the California Gold Rush in 1848, Fallon took a cargo of iron picks made in Santa Cruz to sell to the gold miners. With his share of the profits, he built a combination residence/workshop/hotel on the Mission plaza in Santa Cruz (where the mission chapel replica stands now). In 1849, he married Carmel (Carmelita) Castro Lodge (1827–1923), daughter of local landowner Martina Cota Castro (1807–1890) and her husband Michael Lodge, owners of Rancho Soquel.
In 1852, Fallon sold his plaza property to the County of Santa Cruz for use as a courthouse. Shortly thereafter, Thomas and Carmel moved their family to Texas. Following the death of several of their children, they returned to San Jose. In San Jose, Fallon began buying land in the area and built the Fallon House (1855) in Downtown San Jose. The house is preserved as a museum, across from the Peralta Adobe. In 1856, Fallon was elected to the San Jose Common Council. In 1857, he was elected to the city's Board of Trustees (which had replaced the Common Council) for one year. He was elected Mayor of San Jose in 1859, and served a single one-year term.
According to one account, in 1876 (after 26 years of marriage) Carmel found Thomas and the family maid in a compromising position, and filed for divorce. Carmel used the divorce settlement to build several hotels and other buildings, including the Carmel Fallon Building (1894) at 1800 Market Street in San Francisco, now part of the San Francisco LGBT Community Center. Thomas Fallon died in San Francisco in 1885.
In the 1980s, San Jose Mayor Tom McEnery had the city commission a statue of Fallon raising the U.S. flag in San Jose at a cost of over $800,000. The statue was completed in 1988, and was scheduled to be located in the City Park Plaza (now known as Plaza de César Chávez) near the site of the flag raising. However local groups, including Hispanic Americans, protested that Fallon represented American imperialism and repression of the Mexican population. The statue was stored until 2002, when it was finally displayed in Pellier Park northwest of the original proposed location, near Julian and St. James Streets.
- Chase, John L. The Sidewalk Companion to Santa Cruz Architecture (3rd edition - 2005) p.101 ISBN 978-0-940283-14-5
- Kimbro, Edna E. Construction Chronology of the Site of Holy Cross Church: Ex-Mission Santa Cruz became Holy Cross, Santa Cruz Public Library Local History Articles
- A Battered Beauty, The Noe Review
- Peralta Adobe and Fallon House Historic Site in San Jose
-  Carmel Fallon Building in San Francisco
Peter O. Minor
| Mayor of San Jose
Richard B. Buckner