The former Upper Yarra shire extended either side of the Yarra River from Woori Yallock into the Yarra Ranges. Barak, a leader of the Wurundjeri people, was briefly settled on a reserve here. John Gardiner was probably the first European in the district, overlanding from Sydney in 1836. Surveyor Robert Hoddle led an official expedition into the Upper Yarra valley in 1844. Later explorers included Professor Kernot searching for the source of the Yarra in 1884. When his packhorse kept stumbling up a steep slope, he named the mountain Mount Horsfall.
In the late 1850s gold was found near what is now Warburton and in the following decade miners flocked to the area. They discovered gold along many of the Yarra tributaries including Starvation Creek, McMahon's Creek, and Hoddle's Creek. During the mid-1860s large communities of miners lived at these diggings. In the 1870s these areas were reworked using sluicing methods. Reefton, near the present-day Upper Yarra Reservoir, became a flourishing settlement with 3000 miners and their families, but eventually the workings were exhausted and the camp abandoned. In 1888 the Shire of Upper Yarra was proclaimed, meeting first at Millgrove, then for some years at Warburton and finally at Yarra Junction. The council tried to improve local roads and in the 1890s depression a road was built beyond Warburton as far as the Reefton goldfields using unemployment relief workers.
The Upper Yarra valley's most striking natural resource was its forests. Settlers cleared sites and turned to dairying and later fruit-growing, but timber-milling rapidly became a major industry in its own right. The need for timber across the State for mining, railways, wharves and fencing influenced the decision to build the railway from Lilydale to Warburton, which opened in 1901. Timber-milling was an important industry until the interwar years. The 1929 timber workers' strike caused much hardship locally, with the depression of the early 1930s severely affecting the area. Many men left the district or scratched a living from relief projects, usually on local roads. Floods and bushfires also afflicted the district. In 1926 seven people died at a mill south of Gilderoy, and in 1939 so many bush mills were destroyed and workers killed that the Forests Commission recommended that sawmills be located near towns, improving safety but exacerbating the decline of timber-related employment in rural areas like the Upper Yarra.
Tourism was the other major occupation in the Upper Yarra region. From the 1880s Melburnians were attracted by the wonderful scenery found along the Yarra and in the Yarra Ranges. Walking tracks were cut, guesthouses opened, and by the 1920s the area was a popular destination. In the 1930s Albanian migrants created a flourishing market gardening industry. The construction of the Upper Yarra Dam between 1947 and 1957 also brought new people to the area. A complete township was built to house the workers and their families. The dam's completion trebled the amount of water impounded for Melbourne's use. It also inundated the site of McVeigh's pub, immortalised in a famous 19th-century poster of a former miner, Sam Knott, drinking a schooner of Carlton Ale, saying he 'allus has wan at eleven'. The popular Yarra Falls were now placed in a restricted access catchment area.
By the 1970s parts of the western Upper Yarra were becoming dormitory suburbs of outer Melbourne. Housing estates were built at Woori Yallock and Launching Place, characterised initially by their poor services and lack of accessibility. A decade later suburban subdivisions were viewed less favourably in what remains essentially a rural area.