Once occupied by the Woiwurung people a cattle run was established at Dandenong Creek in 1837 by pioneer Joseph Hawdon who was a principal of the first overland cattle trek across the Murray River to Port Phillip and the first overland drive from NSW to South Australia which was, at the time (1838) the longest journey of its kind to be attempted by whites in Australia. He was also a pioneer of the overland mail service. A native police camp was also set up at this time on land now part of Churchill National Park but it closed in 1839.
At the time Dandenong was a very attractive and verdant valley but the presence of red-gum timber soon drew timbergetters who set up wattle-and-daub huts in the area. Some of the material was used for paving the streets of Melbourne.
This area was the starting point for Charles La Trobe's 1845 expedition to Port Albert. First Dunn's Inn and later Dunbar's Hotels were established in the 1840s - the latter at the corner of Lonsdale and Walker Streets. The first post office opened at Dunn's in 1848 and later moved to Dunbar's which was built of shingles and palings. Land auctions, courts, church services and Road Board meetings were all held at Dunbar's.
A plank bridge was constructed over Dandenong Creek in the early 1840s and a basic road to Gippsland was developed in 1847-48. A new log bridge was built over Dandenong Creek in 1849, a stronger timber bridge the following year and a stone bridge in 1867.
Dandenong began to develop into a town in the early 1850s and a court of petty sessions was established in 1858. It was named Dandenong after an Aboriginal word ('dan-y-nong' or 'tanjenong') meaning 'high mountain' (a reference to Mt Dandenong).
Development of the area was accelerated when a coach road was built between Melbourne and Sale from 1858 to 1865. Agriculture and horticulture became important in the area. After a market was established c.1864 it became one of the state's most important marketing centres for livestock and farm produce. It became a shire in 1873 and the railway arrived in 1879. A brickworks was established in 1894, a canning factory and foundry in 1898 and a bacon factory in 1912.
The area was developed after World War II with many Housing Commission installations. General Motors-Holden opened a motor vehicle manufacturing plants in 1952 and 1955 and Heinz built a large food processing plant at the same time. Consequently the population trebled in the 1950s. Australia's largest market for livestock was built here in 1958 and Dandenong was declared a city in 1959. Since that time it has become a significant manufacturing centre.
The Dandenong Agricultural Show is held annually in November. The Dandenong Market is held at the corner of Clow and Cleeland Sts every Tuesday, Friday and Saturday from 8.00 a.m. and a trash-and-treasure market starts at 8.00 a.m. every Sunday on the South Gippsland Highway.