Bombala was proposed in 1903 by King O'Malley as the site of the parliamentary seat of Australia, a proposal ultimately rejected in favour of Canberra. The railway reached Bombala in 1921 and closed in 1986 being an extension of the line from Queanbeyan to Cooma. The line was and still is known as the Goulburn to Bombala line.
Principal industries of the area include grazing and timber. Tourism is also growing in importance to the local economy. There is also a small amount of specialty producers with meat rabbits, lavender and many herbs being grown in the district.
The timber industry has slowly began to overtake many of the historic properties surrounding Bombala, such as the over 150 year old property of Aston, 10 kilometers South-West of the township.
The area is known for possibly the largest population of Platypus in New South Wales and promotes the area as Platypus Country.