The town's name is reputedly derived from the local Aboriginal word 'madlola' which supposedly meant 'place of the ground frog'. It was first used by Phillip Butler who took up a sheep run in the area in the 1840s. By the 1860s the area had been subdivided and a substantial number of sheep and wheat farmers were finding the conditions ideal. The town prospered and a large, and beautiful, flour mill was built to process the local wheat harvest.
The town never grew to any great size. The impressive World War I war memorial in the centre of town records only ten people from the town being killed. In essence the town remained a largely unspoilt 19th century village.
Mallala changed briefly during World War II when a flying school was established in the district. Suddenly the town had a population of over 2,000 people. After the war the buildings which had housed the trainees were used for newly arrived immigrants from war torn Europe. By the 1960s the town had returned to its previous quietness. Today it is a sleepy little village which is a typical 19th century South Australian wheat town.
The area was settled in the 1840s
It is an intensely sleepy little township with a museum in what appears to be an old wheat mill which is only open on Sundays.