Melbourne was founded in 1835 by John Batman. He was a Tasmanian, looking for an area to establish a pastoral settlement. He had looked at several areas in the Bass Strait region but the location on Port Phillip Bay seemed to be the best. The land was purchased from Aborigines. The purchase gave Batman the "right" to 240,000 hectares of land in the Melbourne and Geelong region on Port Phillip Bay near the Yarra River.

Months later, another Tasmanian arrived by the name of John Fawkner. He disputed Batmanšs right to the land and clamed the same land as his own. Both Tasmanians planted crops in the area as to stake clam to the land. By 1836 there were enough people in the area to gain official status from the Colonial Governor of Sydney. The Colonial Governor named the small city after a British Prime Minister, Melbourne.

Within the year the Colonial Governor decide that Melbourne need a town plan, a surveyor was sent in 1837. This first urban plan was followed closely, as was the case in other Australian cities. The population grew steadily over the next fifteen years. In 1851, the first gold rush hit Melbourne. Immigrants arrived from all over the world to try their luck at gold mining. Only a handful of people gained any wealth from the gold fields, but nonetheless, Melbourne profited from the new settlers that arrived. Melbourne grew at an alarming rate during the gold rushes. After the rushes, most people decided that they liked Melbourne and made it their home. The huge number of immigrants made Melbourne one of the largest cities of the world. For a brief time in the late nineteenth century Melbourne was one the world's twenty largest cities, in terms of population. In its heyday people referred to it as 'Marvelous' Melbourne.