Highlander Lane is located between King and William streets, extending from Flinders Street through to Flinders Lane. Formerly known as Bowden Lane, the name was changed to Highlander Lane prior to 1856. The lane was named after Flinders Street's Royal Highlander Hotel, later called the Holyhead Hotel.
As was standard for many of Melbourne's lanes, more than one hotel was located on Highlander Lane. In addition to the Highlander Hotel on the eastern corner of Flinders Lane, the Great Britain Hotel could be found on Highlander Lane in 1860.
Several warehouses and factories also existed on Highlander Lane in the nineteenth century, which are still standing today. The warehouse and manufacturing and processing factory situated at number 11-17 is listed on the Victorian Heritage Inventory, as is a former government bond store located at number 29-33. The first dated occupation of this building was 1839.