The Yarra Valley is significant as a rainfall catchment area at its upper end, and important to Melbourne for its history, its geography generally, its scenic beauty, fauna and flora, agriculture, and more recently for wineries and the tourist industry.
In 1803, the year of the first attempted settlement in the Port Phillip District, Surveyor-General Charles Grimes discovered the mouth of the Yarra River and the Maribyrnong River where they formed a delta before entering Hobsons Bay. Overlander John Gardiner followed his cattle up the Yarra Valley as far as Mooroolbark. Soon after, surveyor Robert Hoddle led a party up this valley from Melbourne as far as Woori Yallock. In 1844 he resumed his attempt to find the source of the Yarra River and eventually found it in a beech forest on the slopes of Mount Baw Baw.
In July 1851 gold was found at Anderson's Flat (now Warrandyte) and later at Woods Point, near to the source of the Yarra. Permanent European settlement came with the miners. Lilydale, laid out in the early 1860s, was on the Yarra Valley goldfields route. Fertile alluvial soils in the region meant that many townships developed from the 1880s as fruit-growing areas, and orchard and dairying communities (for example, Wandin, Seville, Yering, Gruyere, Coldstream and Woori Yallock).
From Mount Baw Baw to the sea, the Yarra flows through the East Victorian uplands. At its distal end it is in a valley formed on one side by the Great Dividing Range and on the other by the Kinglake plateau. Where it flows through an alluvial plain from Warrandyte to Yarra Glen, it has the Dandenong Ranges to its south and Christmas Hills to the north. Effectively, a Lower Yarra Valley runs from Hobsons Bay to Lilydale, and Upper Yarra Valley from Lilydale to the river's source beyond the Upper Yarra Dam.