It is thought that the Wathaurung Aborigines occupied the area prior to European settlement. Picnickers began to frequent the spot from the 1860s. When the first land was sold in the mid-1880s the locality was known to Europeans as Spring Creek, after the rivulet which demarcates its south-western edge. It soon became a popular holiday spot for residents of Geelong and Melbourne who initially travelled here by Cobb & Co coach. The seaside resort associations, coupled with the English-orientated demographics, saw the settlement renamed Torquay in 1892 after the holiday resort in Devonshire.
The Canadian clipper, the Joseph H Scammel, ran aground 400 metres offshore in 1891. The pine deckhouse was used to build the lower portion of Scammel House which can still be seen in Pride St. It was the hearing into the wreck that led to the construction of a lighthouse at Aireys Inlet.
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