The town is named after
the river, which is presumed to be named after Margaret Whicher, cousin of
John Garrett Bussell (founder of
Busselton) in 1831. The name is first shown on a map of the region published in 1839. Before British settlement the area was inhabited by the
Noongar people. The first British settlers arrived as early as 1850, with timber logging commencing in around 1870. By 1910, the town had a hotel which also operated as a post office. That year the Margaret River Progress Association requested that a townsite be declared at "the Upper Margaret Bridge", because "the district is likely to be dotted with public buildings several miles apart in the near future if a townsite is not made available shortly". The inspecting district surveyor had a preference for an area near the lower bridge on
Caves Road, but his preferred site was unavailable. Lots were surveyed in 1912 and the townsite was gazetted in 1913. From 1918 to 1927, the name of the townsite was officially "Margaret" but it was changed back to "Margaret River" due to local usage. After
World War I, an attempt by the
Government of Western Australia to attract migrants to Western Australia (known as the
Group Settlement Scheme) and establish
farms in the region attracted new settlers to the town. In 1922, over 100 settlers moved into the district. In the early 1920s, the Busselton to Margaret River Railway was built and, in 1925, the
Margaret River to Flinders Bay line opened. The
Perimeter Road, a bypass to take traffic, including heavy vehicles, from
Bussell Highway, to the east of the town, and also connect to a new access road to the
nearby airport, was opened in December 2018 and completed in February 2019. ==Geography and climate==