The first permanent European settlement established in New South Wales in 1788, was Botany Bay – this choice was based on Cook’s journal descriptions where he wrote about the fertile pasture he had seen. His descriptions helped to convince the British government that New South Wales would be the ideal place to set up a penal colony. The First Fleet left England in 1787 for Australia, arriving at Botany Bay in January 1788, and having sighted no human habitation declared the land "terrus nullius". However, this region was deemed to be unsuitable for settlement due its lack of fresh water, and Captain Arthur Phillip (the Colony's first Governor) considered the soil around Botany Bay too poor for growing crops. They moved north, arriving at Port Jackson, (Sydney Cove where the Royal Opera House is today). New South Wales, Moreton Bay (Brisbane), Norfolk Island and Van Diemen’s Land (Tasmania) entered the 19th century with a reputation as "hell on earth" English and Irish rebels and petty thieves were sent to Australia, when the death sentence would have been more merciful, due to poor conditions on both the ships and on arrival to the penal colonies. In many ways, in attempting to escape the death sentence, some convicts actually became the first explorers of Australia’s uncharted interior. Transportation of convicts to Australia ceased by 1868.160,000 convicts had arrived in Australia by this time.

The exploration of the interior of Australia occurred in the nineteenth century. During the 1800’s many fearless adventurers, prospectors and surveyors crossed the continent in all directions. Among these were Burke and Wills who were the first settlers to cross Australia from south to north. They both died on the return trip, from exhaustion and hunger; both were inexperienced explorers and were chosen to lead the expedition across the interior of Australia to win Victoria the reward posted by the government for finding a north-south route, to build a telegraph line. Leichhardt explored parts of Queensland and the Northern Territory, however he was inept at surviving in the bush and many of his expeditions ended in near starvation for his party. While attempting to travel from Brisbane’s Darling Downs to Perth, his party disappeared. Search parties were enlisted to try and find him; some of these found bones, but they were not able to prove that it was any of Leichhardt's company. Other notable explorers were Edmund Kennedy, John Oxley, Edward John Eyre and Charles Sturt.

The intricacy of Aboriginal cultures was poorly understood by many early colonists. Government legislation did not consider the interests of the Aboriginal people but favoured the farmers who were rapidly setting up farms and sheep stations across Australia, often using the unpaid labour of Indigenous people. This lack of understanding of Aboriginal ways of life resulted in many conflicts between settlers and Aboriginal people, as the settlers failed to consider that the Aboriginal people’s spiritual well-being depended on being connected with their land.

The discovery of gold in the 1850’s changed the face of Australia. The arrival of huge numbers of migrants and several large finds boosted the economy and changed the colonial social structures. The Industrial Revolution in England required plenty of raw materials, and Australia's agricultural and mineral resources expanded to meet this demand.