Tasmania was discovered by the Dutch explorer Abel Tasman in 1642. He named the island Anthoonij van Diemenslandt, after his sponsor, the Governor of the Dutch East Indies, Anthony van Diemen. It came to the attention of the British once they had set up their penal colony in New South Wales in 1788. Consequently, George Bass and Matthew Flinders were given permission to explore further south in attempt to discover alternative sites for colonies. In 1798 they discoverd that Van Diemen's Land was an island and not joined to the mainland as had originally been thought. They also discovered that the climate and soil were infinitely richer and more productive than around Sydney.

The first settlement was made by the British at Risdon Cove in 1803 when a small party sent from the colony of Sydney were ordered to stop the French from claiming the island. A second settlement was established shortly afterwards in 1804 in Sullivan's Cove on the western side of the Derwent River, where fresh water was more plentiful. The latter settlement became known as Hobart Town or Hobarton, later shortened to Hobart, after the British Colonial Secretary of the time, Lord Hobart. The settlement at Risdon was later abandoned.

The Australian convicts and settlers involved in the colonisation of Tasmania were mostly convicts and their military guards, and were set the difficult task of developing agriculture and other industries on this wild island. The relative isolation of the colony—coupled with particularly treacherous currents—also meant that it could become a dumping ground for the most intractable of convicts. And some of the Irish rebels tried for their parts in the Young Ireland movement of the 1840s were sent to Van Diemen's Land. By 1804 the settlements of Hobart, Risdon and Launceston had all been founded. Indeed, almost half of the convicts who were transported to Australia were sent to Van Diemen’s Land. There they found a land of bounty and a penal society, a kangaroo economy and a new way of life.

By 1824 it was clear that the island would need to administer itself and it was formally separated from New South Wales. Its new Lieutenant Governor, George Arthur, made it clear that he intended to initiate a new and harsh regime. He believed that their work should be 'hard enough to bring home to the miscreants all the abomination of their wrongdoings, while at the same time setting them the example of a righteous master from whom their black hearts might well pick up a sense of goodness.' Van Diemen's Land became a penal colony within a penal colony. In the 50 years from 1803-1853 around 75,000 convicts were transported to Tasmania. By 1835 there were over 800 convicts working in chain-gangs at the infamous Port Arthur penal station, which operated between 1830 and 1877. The very name of the place could send a shudder down a convict's back.

Bushrangers began to plague the new colonies by the early 1800's. Between 20 and 40 convicts generally escaped every year to the wild country around the central lakes of Tasmania. There, in the rugged moutain wilderness, they led desperate and daring lives, sometimes with the natives, to whom they quickly taught all the wickedness they themselves knew. Their ordinary lives were retchedly debased, as they were forever in search of booty or in revenge for fanciful injuries. They often committed the most savage crimes and treated their native companions like beasts, to be used for a while before being shot or bashed when no longer needed. It was therefore not surprising that the blacks soon became filled with the most intense hatred for all the white invaders of the land.

The Aboriginal tribes united frequently to attack a lonely farmhouse and slay all of its occupants. Hence, every settler in the country districts was well supplied with arms. It wasn't surprising to find walls pierced here and there with holes through which a musket could be placed to safely fire at the advancing enemy. The fear of bushrangers who might attack for the sake of plunder and of the natives who might massacre them in revenge, kept the scattered settlers in a constant state of anxiety and fear.

In 1817, when Governor Davey grew tired of his position and resigned, the position was filled by Colonel Sorrell. The new Governor set himself the task of stopping these rutherless marauders. He was to some extend successful and the young colony enjoyed an interval of peace. Farming was profitable and the export of wheat began to assume large quantities.

Much of the progress was due to sensible manangement of Governor Sorrell, who spared no effort in reforming the convicts, as well as encourage and refine the free settlers. Hence it was with great regret Governor Sorrell's term of office expired in 1824. They petitioned the English Government to allow him to stay for another six years but it was refused because Sorrell was required elsewhere. On his departure he was presented with a handsome testimonial and given an income of £500 a year from the settler's revenue.

Ultimately, the association of Van Diemen's Land with harshness led to the authorities deliberately changing the name of the colony in 1856 to try and shake off the association. The colony had stopped taking new convicts from Britain in 1853 and wished to attract free settlers instead. It therefore underwent something of a makeover to try and shake off its poor reputation. The last penal settlement in Tasmania at Port Arthur was closed in 1877.

In popular culture: Van Diemen's Land is mentioned in a number of Irish folk songs as it was often the destination of Irish rebels convicted by the British. In the modern era, the Irish rock band U2 featured the song "Van Diemen's Land" on the 1988 album Rattle and Hum.