The
original inhabitants of the local area were the
Dja Dja Wurrung people. European settlement began with squatters raising sheep and cattle.
Gold was discovered in 1858 and the town became a service centre for diggers travelling to
Bendigo and
Castlemaine. Malmesbury Post Office opened on 9 November 1854, closed within two months, reopened in 1856, and was renamed Malmsbury around 1896, although the name Malmesbury remains in occasional use. Malmsbury Reservoir began construction in 1866 and was completed in 1877. The dam wall at Malmsbury was enlarged in 1888 and the addition of steel flood gates in 1939 increased storage further. Deterioration has forced the flood gates to remain open which has reduced the capacity of the reservoir to pre-1939 levels. The last of Victoria's early pioneers, James Thornton who came with
John Batman to
Melbourne in 1836 operated public houses for thirty years until the early 1890s.
Edward Davy, who invented the
electric relay, making long-distance
telegraphy possible, was mayor of Malmsbury three times in the mid-nineteenth century. ;Malmsbury Football Club The Malmsbury Football Club was established in 1874 and they won the
Kyneton District Football Association premiership in 1894,1905 and in 1920. Malmsbury FC played in Midland Football League in 1931 and 1932. Malmsbury FC were runners up in 1934 and later won the 1952
Castlemaine District Football Association premiership. Malmsbury joined the Daylesford Football League in 1953 and played Korweinguboora in a tied grand final and won the grand final replay in 1953 and won another flag in 1954. ==The Town Today==