The area was populated by the
Thaua Aboriginal people, with shell middens dating back 3000 years. In 1797, the European voyager
George Bass explored the area. The name Pambula is derived from its
Dharwa name, pronounced "panboola", meaning 'twin waters'. although Pambula came to be used for postal purposes. Pambula had become the more commonly used name, by 1915. The official name, recorded by the Lands Department and
Geographical Names Board, only changed, from Panbula to Pambula, in September 1967. Pambula is a historic village with its first European settlers thought to have been the
Imlay brothers who established cattle runs on the Pambula River flats in the 1830s. The village of Pambula situated on the flats near the river was planned in 1843 by surveyor
Thomas Scott Townsend, and the first school and churches were built there, but frequent flooding led to the village being relocated to its present site on higher ground. The main land uses were grazing and agriculture, and tented accommodation on stock routes was replaced by
slab and bark huts, then by more permanent buildings providing homes, housing, smithies, and hotels. Pambula had five licensed hotels by 1856 and the foundation stone for the courthouse was laid in 1860. Pambula was proclaimed a town in 1885. In 1888, gold was discovered and villages grew up around the mines at nearby
Yowaka River and Pipeclay Creek. This created a boom in the town, but in the early 20th century production of gold ceased and the prosperity of the town went into a decline.
William McKell, Premier of New South Wales from 1941-1947 and Governor-General of Australia from 1947-1953, was born in Pambula in 1891. Pambula continued to be the dominant town of the district, providing facilities which came to include commercial premises, banks, courthouse, hospital, newspaper, and a school of arts. Agriculture developed on the river flats, producing prize crops of maize and potatoes, and a dairying industry became established. Timber felling was carried out in the surrounding forests, and oyster farming was developed in the river. == Heritage listings ==