In 1642 Abel Tasman made landfall while seeking trading opportunities for the Dutch East India Company. He named the region Van Diemen's Land after a high-ranking official in the Company. Much later, this was changed to Tasmania in honour of the explorer.

Between 1772 and 1793 Bruni d'Entrecasteaux and Huon de Kermadec explored the coast, naming the Huon River and Bruny Island. Captain Bligh, of mutiny on the Bounty fame, and Captain James Cook anchored in Adventure Bay, which can be seen from the Resolution Road. An explorer by the name of John Hayes named the Derwent River.

Governor King of the British settlement at New South Wales became increasingly nervous about the intentions of French explorers in the region. In  March 1803 he commissioned Lt. John Bowen to form a settlement at the River Derwent to ward off French interests, to establish another base for convicts and to exploit the island’s timber getting, agricultural and sealing resources. The settlement was to be called Hobart, named after Lord Robert Hobart, 4th Earl of Buckinghamshire, the British Secretary of State for the Colonies.

A site was chosen on the eastern bank of the river where the town of Risdon now stands. At the same time, Captain David Collins was sent to Port Phillip Bay in Victoria, but quickly decided that the place was unsuitable for settlement and pressed on to Van Diemen's Land, arriving in 1804. He immediately took charge and moved everybody to Sullivan's Cove, where he founded Hobart Town.

The worst criminals, repeat offenders and unmanageable prisoners were sent to penal settlements in Van Diemen's Land. It was the perfect penal colony because a huge labour force was required to establish the settlement and inaccessibility and wildness ensured isolation and security.

The fledgling settlement at Sullivan's Cove was plagued by food shortages, convict unrest and internal conflicts. The food supply became so desperately low in 1806 that Lt. David Collins had six whalers from the Ferret flogged for refusing to hand over two casks of biscuits and three casks of flour for the relief of the settlement.

The settlers were constantly under threat from starvation and raids by bushrangers. It was soon found that wheat thrived in the areas around Richmond and Sorell, and by 1817 excess produce was being exported to Sydney.

From 1820 the township blossomed from a mixture of settlers' huts and rural land into an ordered and well-planned town. The area known as Queens Domain, which today includes the Botanic Gardens, was commissioned for the Governor. A number of mansions were built around this precinct, including Runnymede in New Town (circa 1836). New industries such as the Cascade Brewery (1824), with its "wedding cake" Victorian façade were also established, and in 1837 Australia's oldest theatre, the Theatre Royal was built.

Charles Darwin visited Hobart Town in February, 1836 as part of the Beagle expedition. He writes of Hobart and the Derwent estuary in his Voyage of the Beagle:

By 1853, however, as Tasmanians were celebrating the end of convict transportation to the colony, the population had reached over 70,000, whaling and wool exports had become the mainstay of the colony, and ship-building was also showing great potential. Over 127,000 acres were under cultivation. Tasmania had been made a separate colony in 1825, and in 1856 was granted responsible self-government.

The expansion of settlement had caused the Aboriginal population to suffer both dispossession and depopulation. The original inhabitants of Tasmania had been indigenous to the island for more than 20,000 years when Europeans arrived. They greeted explorers with distant tolerance until it became evident that their land was under threat, and then retaliated. The Governor reacted in turn, with an order sanctioning forcible action. Permission was granted to local settlers to shoot Aborigines on sight.

Prolonged conflict with settlers and sealers over resources, sanctioned murder, the abduction of Aboriginal women, and exposure to disease whilst held in captivity severely reduced their numbers. In the 1830s the remnants of the Aboriginal population living in the bush were removed to Wybalenna, Flinders Island where they were housed in ‘gaol-like’ conditions. Children were routinely removed to the Orphan School, Hobart. In 1847 Wybalenna was abandoned and the 47 Aborigines left there were transferred to Oyster Cove Aboriginal Station, south of Hobart. In this dark history, the last full-blooded Aborigine, Truganini, died in 1876.