Apollo Bay was part of the traditional lands of the Gadubanud or King Parrot people of the Cape Otway coast.
In the 1840s the Henty brothers established a whaling station at Point Bunbury on the western end of the bay. The bay was named by a Captain Loutit in 1845 when he sheltered his vessel, the Apollo, here from a storm.
The first European settlers were timber cutters in the 1850s who subsequently established sawmills. Farmers later moved into the area and a small settlement on Apollo Bay named Middleton developed. A Post Office of that name (with a fortnightly mail delivery) opened on 1 May 1873 (relocated to the township of Krambruk in 1881 and renamed Apollo Bay in 1898). During this period almost all access to the area was by sea.
The township of Krambruk (later to be renamed Apollo Bay) was established in 1877, and a school was open by 1880.
With the upgrade of the road to the town in 1927 and the completion of the Great Ocean Road in 1932, the town became a tourist destination and an important fishing port.
In 1936 a submarine telegraph and telephone cable from Apollo Bay to Stanley provided the first connection to Tasmania from the mainland. The Apollo Bay Telegraph station closed in 1963 and is now a museum.
On July 10, 1932 the coastal steamer Casino sank while attempting to berth at the town jetty. Ten lives were lost. Earlier shipwrecks have occurred along the Cape Otway coastline
