Prior to European settlement of Australia, the Ballarat region was populated by the Wathaurong people, an Indigenous Australian people. The Boro gundidj tribe's territory was based along the Yarrowee River. The first Europeans to sight the area were an 1837 party of six mostly Scottish squatters from Geelong, led by Somerville Learmonth, who were in search of land less affected by the severe drought for their sheep to graze. Archibald Yuille named the area "Ballaarat", which he derived from local Wathaurong Aboriginal words for the area, “balla arat”. It is generally thought to mean 'resting place'.
The first publicised discovery of gold in the region was by Thomas Hiscock in 1851. The find brought other prospectors to the area; John Dunlop and James Regan struck gold at Poverty Point with a few ounces. Within days of the announcement of Dunlop and Reagan's find, a gold rush began and thousands of prospectors arrived at the Yarrowee valley, which became known as the Ballarat diggings. Yields were high, with the first prospectors in the area extracting around half an ounce, which was more than the average wage of the time, and five ounces of alluvial gold per day. As news of the Australian gold rushes had reached the world, Ballarat gained an international reputation as a rich goldfield. As a result, a huge influx of immigrants, including many from Ireland and China, gathered in a collection of prospecting shanty-towns around the creeks and hills. In just a few months, the population had swelled to over 20,000 people.
Civil disobedience in Ballarat led to Australia's first and only armed civil uprising, known as the Eureka Rebellion and colloquially referred to as the Eureka Stockade, which took place in 1854. The event, in which 22 miners died, is considered to be a defining moment in Australian history. The gold rush population peaked at almost 60,000 by 1858, made up of mostly male diggers,. Ballarat was proclaimed a city in 1871. Following the turn of the century, however, mining activity had slowed, Ballarat's growth had all but stopped and the city went into a period of decline. The Great Depression proved a further setback for Ballarat, with the closure of many institutions and causing the worst unemployment in the city's history. While deep, the depression was also brief and the interwar period proved a period of recovery for Ballarat, with a number of major infrastructure projects well underway, including a new sewerage system.