European exploration began in the early 19th century, when Charles Throsby passed through in 1818, noting his Dharawal companions called the area ‘Bantanoon’, meaning ‘a place of deep gullies’. The surveyor Charles Harper in 1824 preferred ‘Boon-Doo-Noon’. In 1828, Assistant Surveyor Phillip Elliott named the local creek ‘Bundanoon Creek’.

Farming commenced in the area in the 1830s. Originally known as Barren Ground, then Jordans Crossing, the township developed after the arrival of the railway in 1868. In 1881, the NSW Government named the growing village ‘Bundanoon’. It became a popular tourist destination, celebrated for its proximity to the dramatic sandstone landscapes of what is now Morton National Park.