Clunes was the site of Victoria's first gold strike. It is located in a steep valley surrounded by rounded hills which are actually extinct volcanoes (they can best be seen 3 km south along the road to Ballarat).

Clunes is one of the most intact 19th-century towns in the Central Goldfields boasting numerous sandstone, bluestone and brick buildings. Fraser St, the commercial centre, is wide and elegant, full of 19th-century shops with original store-fronts and distinctive verandahs. Fraser St has been the setting for many films including 'Mad Max' and 'Ned Kelly'. The Djadja Wurrung people were the first inhabitants and these people occupied most of central Victoria. The words Djadja Wurrung defines the name of the tribe and the language they spoke. It is a combination of 'djadja' (yes) and 'wurrung' (speech). Being called the "yes people" suggests that the tribe were considered to be a friendly group of people.

The "Gurabungalid Gundidj" clan were part of the Djadja Wurrung tribe who were based around Mt Beckworth. The clans were also made up of small family groups. There is no evidence of their presence in the town of Clunes however on farms and near outlying streams middens and stone formations can be found.

The first European settler, 21 year-old Donald Cameron, an overlander from Sydney, took up a pastoral run in 1839, naming it Clunes after his birthplace in Scotland. The name in Gaelic means 'a pleasant place'. Major Mitchell passed through Clunes in 1836 and pronounced it 'good'. The site of Cameron homestead can be seen along the creek, down stream from the ford about half a mile. The site is marked by a large group of trees at a bend in the creek. In 1847 the station covered 32,000 acres and carried 15,000 sheep and 50 cattle. Donald's uncle, Dugan Cameron set up his station at mount Cameron, which was named after him.

Gold traces were first found on this property by a friend, William Campbell, in March 1850, although news of the find was concealed. During the 1840’s there were many rumours of gold being found in the area by shepherds, but the squatters suppressed the evidence to keep the district as a quiet pastoral district. A young man named Chapman took the first sample of gold to a Melbourne jeweller in 1849. It was known by many that the quartz reefs on the Cameron station contained gold, and that many other deposits would be found around this area of the Port Philip Settlement, which was still part of the Colony of New South Wales. When Victoria became a Colony and was separated from New South Wales, a reward for the discovery of gold, to promote a population growth in the new colony, was made by a group of Melbourne business men, who offered the sum of £210 ($420)

In July 1851, James Esmond, who had been to the goldfields of California, came to Clunes and mined some samples from the quartz, then journeyed to Geelong to report the discovery. He reached Geelong on Saturday, 5th July 1851 where his report was received with great enthusiasm. The news was published in the Geelong Advertiser on Monday, 7th July 1851. On Wednesday, 9th July 1851, the Melbourne Daily News reported a find at Anderson’s Creek (Warrandyte) – so the gold rush started in Victoria. James Esmond then returned to Clunes with his partner, James Pugh, and commenced mining in Clunes. In many cases, as people rushed to the gold areas, gold was extracted by very primitive and laborious means. One man was reported to be breaking quartz with a hammer, and extracting the gold with his knife.

Clunes Mine

For the first six years, mining was still on a very small scale, and people lived and worked in very difficult conditions. In 1855 Donald Cameron sold his station property and returned to Scotland where he purchased a property near Inverness and named it "Clunes".

In 1857, the Port Philip Company became interested in the Clunes reefs, when Mr. Rivett Henry Bland heard of their possibilities. In February of that year, a lease was drawn up with the owners of the land, to give the Company the right to mine on the land for 21 years, the owners to receive 10% of all gold mined. This proved very profitable mining, at first 160 acres then later 50 acres, the royalty amounting to £135,000 ($270,000) in the first twenty-four years.

The Clunes Quartz Gold Mining Company was responsible for the underground work, but eventually the two Companies became The Co-Operative Company and the shareholders were receiving good dividends by this time. Clunes began to prosper from 1857 and from a small cluster of huts and tents, soon grew to a sizeable town. By the end of 1858, there was plenty of work, the mines were paying well and everyone was prosperous. In 1859 Fraser Street was described as being a "mass of mud" and ladies were losing their footwear. By this time the population had reached 1,000 and by 1861 had grown to 1083 and there were 470 dwellings.

Clunes had now its own council and 292 children attended five schools. The population increased in 1866 to 3526. There were 8 schools, 850 dwellings, 5 churches, and 7 quartz mines. By 1862 Clunes possessed a Freemasons Lodge, a Manchester United Order, Oddfellows, Forresters, St.Andrews Society, Hiberian Society, Rechabites, Orange Lodge, Protestant Alliance, Good Templars. There were many private schools, and by 1875 the North Clunes State School was built, and in 1880 the South Clunes State School. The Police Company was established on Camp Hill, in Camp Parade. There were 15 hotels, 12 grocers, 1 baker, 6 butchers, 4 fruit and confectionary shops, 2 restaurants, 4 boarding houses, 2 tailors, 3 drapers, 4 bookshops, 2 painters and paperhangers, 2 ironmongers, 4 blacksmiths, 2 wheelwrights, 2 stationers, 5 churches, 2 doctors, 3 foundries, 1 gas works and several brickmaking yards.

Up to 1860, the only crossings over the creeks were fords or small bridges, but in 1861 the Victorian Government made £10,000 available to build the stone bridge at the end of Bailey Street, near Creswick Road, which is still known as Government Bridge. The first construction was a laminated wooden arch, which was very handsome, but was rebuilt in 1896 of stone and steel girders. About 1864, a substantial bridge was built at the end of Service Street and by this time there were many other small bridges, built by the mines or private people. By the 1860’s and early 70’s there were 63 businesses and 23 hotels in the length of Fraser Street. The maximum number of licensed hotels in the borough was in 1870, when 50 licences of £25 were paid to the Council.