(3777, 58 km E, Yarra Ranges Shire)
Healesville is located on the Maroondah Highway at the junction of the Graceburn and Watts rivers in the foothills of the Great Dividing Range. In the early 1860s when gold was discovered at Woods Point in the mountains to the east, the most frequently used route to the diggings was via the Yarra Track from the Diamond Valley, across the Watts River to the north of the site of Healesville, then along an Aboriginal route across the Black Spur to Marysville, Narbethong and Matlock.
For a while a settlement called New Chum on the Watts River was the local stopping point for travellers. In 1863 a new road was constructed to the south of New Chum. It passed through a new town that was surveyed in 1864 and named Healesville in honour of Richard Heales, Victorian Government leader (1860-61). New Chum soon disappeared and Healesville flourished by offering hospitality to the passing traffic of miners and timber-cutters who worked in the heavily forested hills nearby. The town's first sawmill opened in 1863. In the same year the Coranderrk Aboriginal Reserve was gazetted, south of Healesville on Badger Creek.
Timber remained an important local industry in the district, but traffic to the goldfields dried up in the 1870s. In the 1880s it was replaced by tourists attracted to the fern gullies, forested peaks and giant Mountain Ash trees that were photographed and popularised by Nicholas Caire and J.W. Lindt. The little town of Fernshaw at the base of the Black Spur and close to the popular Mathinna Falls, boasted two hotels. In the mid-1880s the area around Fernshaw was declared a water supply catchment district with the construction of Maroondah Weir. By the end of the 1880s when the railway line was constructed, Healesville became the tourist focus, with its grand hotels and guesthouses including the imposing 60-room Gracedale House (1889) which operated until the 1950s.
From the 1920s motor cars made Healesville more accessible to day-trippers from Melbourne, and the Royal Automobile Club of Victoria (RACV) established a country club there in 1951. The Acheron Way tourist road, between Healesville and Marysville, opened in 1929. Improved roads also aided the transport of timber to the railway station at Healesville through the rugged country from towns such as Toolangi to the north. Toolangi itself became well known in the 1920s and 1930s as the home of poet C.J. Dennis. After disastrous bushfires in 1939, sawmills were relocated closer to Healesville and Toolangi and the timber industry became the major source of employment in the district.
In the 1930s locals hoped to embellish Healesville's attractions with an artificial lake on Chum Creek at Healesville West. Although some housing blocks were subdivided here at the time, Yumbunga Lake was used mainly as a camping ground. In the 1950s many of Healesville's guesthouses closed their doors, and the timber industry also declined. Outlying areas of the shire such as Steels Creek, Dixons Creek, Castella and Yarra Glen maintain their status as dairying and pastoral districts, with a resurgence in recent decades of the wine industry. Not all of these districts were part of the original Shire of Healesville when it was formed in 1887. Its boundaries changed several times over the next century until it was dissolved and absorbed into the shires of Nillumbik, Yarra Ranges and Murrindindi in 1995. Healesville Sanctuary, opened in 1934, remains one of Victoria's major tourist attractions.