The land surrounding the township of Macarthur is rich and fertile. Evidence of volcanic activity is obvious as Mt Eccles. About September 1836 explorer Major Mitchell, when returning from the Portland Bay settlement, marked and named Mt Eeles on his map. William Eeles was a friend of Mitchell’s who had fought with him in the Peninsula War. It seems a typographical error in the Surveyor General's Department sometime about 1845 changed the name to Mt Eccles and this has been the name ever since.

In the very early days of our settlement most areas in our state had been taken up under pastoral licenses. This was also the case in the Macarthur district. The township of Macarthur lies at the junction of three pastoral licenses “Eumeralla West”, “Eumeralla East” and “Blackfellows Creek”. When the first Europeans arrived they displaced the native Aboriginal people, who had lived in the area for thousands of years.

John Turner surveyed the township in early 1857 and it was he who changed the name from the Aboriginal name “Eumeralla” to Macarthur after Administrator Macarthur, eldest son of John and Elizabeth Macarthur, acknowledged as the founders of Australia’s merino sheep industry.

However, prior to the surveying of the township a hotel had been established near the river crossing on the main Port Fairy to Hamilton Road and this hotel appears to have been the Macarthur township's first building. A land sale held at the hotel in July 1857 proved successful and many blocks were taken up by settlers who formed the founding community of this small town.

A well known identity in those early years was Thomas Alexander Browne, perhaps better known as Rolf Boldrewood, author of the Australian classic Robbery Under Arms. Browne held the pastoral license for “Squattlesea Mere” - south-west of Macarthur - from around 1844, although he was not particularly successful as a pastoralist. He later wrote of his time in the Macarthur district in his book Old Melbourne Memories.

Originally Macarthur was part of the municipal area covered by the Belfast Roads Board. In 1870 Macarthur became part of the newly formed Shire of Minhamite. In 1994 the Shire of Minhamite joined with other small adjoining shires and the Borough of Port Fairy to form the Moyne Shire Council.