Before European settlement, the Buandig (or Boandik) people were the original Aboriginal inhabitants of the area. They called it 'ereng balam' or 'egree belum', meaning 'home of the eagle hawk'.
The peak of the extinct Mount Gambier crater was sighted in 1800 by Lieutenant James Grant from the survey brig, HMS Lady Nelson, and named for Lord James Gambier, Admiral of the Fleet.
The Henty brothers who owned large holdings in Portland, Western Victoria claim to the land, were forced to retreat when the lands were granted to Evelyn Sturt, the brother of the explorer Charles Sturt. Industries soon began to appear. The Post Office opened on 22 September 1846, John Byng built the Mount Gambier Hotel in 1847, and Dr Edward Wehl arrived in 1849 to begin a flour-milling operation.
Hastings Cunningham founded "Gambierton" in 1854 by subdividing a block of 77 acres (31 ha). From 1861 to 1878 the Post Office was known by this name before reverting to Mount Gambier. Local government appeared in 1863 when Dr Wehl, who now owned a substantial millhouse on Commercial Road, was elected chairman of the District Council of Mount Gambier. In December 1864 this became the District Council of Mount Gambier West and, at the same time, a separate District Council of Mount Gambier East was formed.
Incorporation in 1876 saw a further division, with the creation of the Town Council and Mr. John Watson elected Mayor. Mount Gambier was governed in this fashion until 1932, when the District Council of East and West merged to form a single District Council of Mount Gambier once more.
On 9 December 1954, Mount Gambier was officially declared a city, and is now an important tourism centre in south-east South Australia
