Prior to colonisation, the Boolarra area was part of the country of the
Gunaikurnai people, who had lived there for over 20,000 years. The first European settler, W.H. Penaluna, arrived around 1878, taking up land along the Morwell River and erecting the Settlers' Arms Hotel. Land was quickly taken up, when a railway line was built in 1884‑5, connecting
Mirboo North, Boolarra and
Yinnar to
Morwell, on the main Melbourne‑Sale line. The hill country south and east of the Morwell River was opened up and a series of small communities, such as Budgeree, Gunyah, Ruyton Junction and English's Corner, began to flourish as goods and services flowed to and from Boolarra, which was the commercial and agricultural centre of the district. Initially, the early settlers depended on timber and mixed farming for their livelihood. Blackwood for furniture and palings, cut from the surrounding forests, was freighted to Melbourne. Butter, salted and packed on the farm, was also sent to the city. In 1905, the Danish firm Heyman set up a butter factory in Boolarra, and dairying became the main industry of the district. At that time, Boolarra's population rivalled that of Morwell. At its peak, Boolarra supported three general stores, three hotels and four churches, along with two butchers, two bakers and three confectionery shops. Horses were harnessed and shod by two blacksmiths and the butter factory provided the bulk of employment for the town's youth. At one stage, a black coal and bauxite mine triggered an investment flow into the town. In 1937, a large fire raged through Tarwin Street, destroying many of the original shop fronts. After
World War II, residents banded together to create a Memorial Park, with the names of the town's fallen soldiers inscribed on its gates. ==Today==