Port Fairy is the middle one of three harbours along the coast, Portland, Port Fairy and Warrnambool.

Port Fairy was named after a small boat ‘Fairy’, captained by James Wishart, which entered the port and probably the River Moyne during a whaling reconnaissance. Popular accounts have put the date of the event at 1810. However, surviving evidence and general knowledge of Bass Strait whaling and sealing activity support a date of 1828 to 1829.

Apart from pastoral activity, farming, sealing and whaling camps, the first substantial European occupation came with Atkinson’s Special Survey (which was eight square miles) east of the river and adjoining the coast in 1843. Atkinson privately surveyed a township in 1846, the street boundaries being the boundaries of the old Port Fairy township area. The town was named Belfast, the river the Moyne (both Irish names, from Atkinson’s birth place) but the harbour was known as Port Fairy. The survey included land grants for religious groups, colonial government facilities, an asylum and immigration barracks.

Atkinson’s survey (1843) seems to have instantly attracted villagers, as upon the making of the town survey Anglican and Catholic chapels were constructed and there were bluestone stores at the wharf. Parts of the Caledonian and Merrijig hotels date from 1844, or possibly earlier. By 1847 there were also Wesleyan and Presbyterian churches, and all four conducted schools during the 1850s.