This town began during the Victorian Gold Rush. It is located on the traditional lands of the Dja Dja Wurrung people, who called the area Lea Kuribur. One of the very first accounts of the Dunolly Gold Rush was recorded by the Bendigo Advertiser on 3 July 1857 that estimated the population at 12,000. Confirmation of a rush followed on 10 July.
Australian natural gold nuggets are in high demand from investors and collectors due to the high purity of Australian gold. Australian Gold Nuggets generally have the highest purity (92% to 98% pure, 22KT to 23KT) of any natural gold nuggets found in the world.