Prior to European occupation the area was occupied by the Jajowurrong tribe. The first known white men on the townsite were the party of Major Mitchell during his Australia Felix expedition of 1836.
Squatters followed in Mitchell's wake owing to his favourable reports and droughts in NSW. Thus, in 1841 the 'Mount Alexander' pastoral run had been established by William Barker. It was named after the granite outcrop which looms high above the horizon to the north-east of Castlemaine.
It was on this property, in July 1851, that one of Barker's shepherds found gold at Specimen Gully (5 km north-east of Castlemaine). Soon all of the area's streams were being scoured by a rag-tag army of hopefuls from all over the world.
Gold Commissioner Wright established a camp on the present townsite at the confluence of Forest and Barkers Creeks (the site is known today as Camp Reserve) . It briefly served as the administrative centre for all the Central Victorian goldfields. By mid-1852, his staff numbered 300. This camp provided the impetus for the emergence of a settlement which served as a supply centre for the local goldfields as they continued to spread out in all directions.
This centre was initially known both as 'Mount Alexander' or 'Forest Creek'. However, in a way that was familiar throughout Australia, local usage was overridden by government officials who often favoured names honouring officials of the British government, British nobility, British relatives, British patrons who could aid their careers (or all four of the foregoing) and British place-names. There are two versions relating to the naming of Castlemaine. One states that Commissioner Wright renamed the settlement after his uncle, Viscount Castlemaine, on whose estate in Ireland he spent part of his childhood. The other states that Governor La Trobe named it after Castlemaine in Ireland where he had been inspector of schools. However that may be, land was surveyed just to the north-east of the camp in 1852 and Castlemaine was declared a town the following year when town allotments first went on sale.
By 1852 it is thought that there were some 25 000 people on the Mount Alexander diggings, living in shanty towns of canvas tents which housed stores, the first school at Castlemaine (1852), dwellings, sly-grog shops and even an office of the Bank of NSW (also 1852). It was around this time that a local confectionary maker, T.S. Barnes, started producing Castlemaine Rock. By 1853 Barnes was selling it from a tent on the diggings. It is still being manufactured today by his descendants.
Having established themselves, the residents and proprietors around the government camp were reluctant to move to the new government survey site, particularly as it was heavily strewn with logs and debris from the clearing process. However, in early 1854, the gold commissioner issued an order that all of these premises be evacuated and the shift to the area around Market Square (the new commercial centre) gathered pace.
The kinds of grievances which led to the Eureka Stockade in 1854 (see entry on Ballarat) were given voice at Castlemaine on a rise which became known as Agitation Hill. An Anglican Church was raised on this prominence in 1854. It was one of five churches in Castlemaine by the end of that year, by which time there were also several hotels, a brewery, numerous stores and a growing number of residences. Brick and stone began to replace canvas and slab-timber.
In 1855 a new rush began at North Castlemaine, along Forest Creek, and the first National School opened in a tent with a proper building erected for that purpose the following year. In 1856 the settlement was declared a municipality and work commenced on the present Botanical Gardens.
Many Chinese miners were present at the diggings, particularly at Guildford. In August 1857 about 1300 Chinese gathered at Mechanics Hill in Castlemaine to protest a bill over increased taxation. They tended to band together in large encampments for safety as hostility to the Chinese was overt and overwhelming on the goldfields and there were numerous local conflicts, some of considerable proportions. The famous but ill-fated explorer Robert O'Hara Burke, as superintendent of police in the Castlemaine district from 1858 to 1860, would have been involved in many such disputes. The 1861 census recorded about 5000 Chinese in the area.
The town's first flour mill was established in 1857. It became a railway foundry in 1860 and then a portion was used by Cobb & Co as a coach factory and farriery establishment from 1864. Edward Fitzgerald also opened the first Castlemaine brewery in 1857 (he moved his operations to Queensland in 1887). The first slate quarry was in operation by 1859, supplying thousands of tons of flagging to Melbourne and other cities.
Over time Castlemaine became recognised as one of the world's richest alluvial goldfields. The yield from the field was remarkable with a peak being achieved in 1852 when, in a six month period, a staggering 16 600 kg were shipped out of the district by Gold Escort and, in 1860, the figure was still as high as 140 kg a week. By 1860 about 30 000 people were thought to reside in the Castlemaine area. The years of prosperity saw the construction of some substantial buildings and it was hoped that Castlemaine would prove the state's second city. The townsite then had six banks and two newspapers. The present gaol, market building and courthouse were built in 1861-62 and the railway line arrived in 1862.
However. the alluvial gold soon began to peter out and the area lacked the gold-rich quartz reefs of other centres. Thus the population began to wane. Yet the town did not drastically decline, due, in large part, to Castlemaine's industries. The quarry, flour mills, railway foundry and brewery were still in operation and Yeats Metallic Paints was established at North Castlemaine in 1868, utilising iron oxide from the tailings. Castlemaine Woollen Company (one of the first large-scale woollen mills in the state) and Thompson's iron and brass foundry and engineering workshops were established in 1875. This foundry manufactured the gates of the Botanical Gardens and the machinery for the woollen mill. It is still in operation today. The Castlemaine Bacon Company opened in 1905 and it is now operating as Castlemaine Traditional Smallgoods, employing 750 people. Castlemaine was declared a city in 1965.
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