In 2002, the Victorian Coastal Strategy report named Portarlington as a potential site for a multi-million dollar Safe Harbour development on the Bellarine Peninsula. In December 2005, private independent consultants delivered a feasibility study which identified Portarlington as the preferred site for the development.
Apart from the likely wanderings of the escaped English convict, William Buckley, who lived among the Wautharong people around the Bellarine Peninsula for 32 years after escaping into the bush in 1803, there was little European contact with the area until the arrival of the pioneer settler, John Batman, and his Port Phillip Association expedition in 1835. Batman established a base camp at Indented Head, and proceeded to survey the interior of the peninsula. Batman wrote glowing reports of the pasture and grazing potential of the Bellarine Hills (which he named "Wedge's Range"), with a view of attracting interest in establishing sheep runs in the Port Phillip area. Further exploration was carried out by John Helder Wedge later in 1835, with Batman's encouragement, and Wedge is believed to have again passed through the vicinity of Portarlington. He was also much impressed by the countryside, which he named "Ballarine", but discovering the scarcity of fresh water, he directed his attentions elsewhere. When the first organised group of settlers arrived from Van Diemen's Land aboard the Enterprize in August 1835, they sought out the well watered northern reaches of Port Phillip, around the Yarra River. Wedge and the Batman party quickly abandoned Bellarine and Indented Head and followed them there.
When the holdings of the Port Phillip Association were allocated, the Bellarine Peninsula was allotted to the member, John Sinclair, who was the Superintendent of the Engineers' Depot in Launceston. Sinclair was injured in February 1837, when he came to Port Phillip and attempted to visit his property. His two companions, Joseph Gellibrand and George Hesse, who continued the journey without him, disappeared, and no trace of them was ever found. Sinclair was evacuated back to Melbourne from Point Henry and made no further effort to take up his allotted land, although he remained in the Port Phillip District. By 1839 the Port Phillip Association had been bought out by the Derwent Company, which sold a number of runs on the Bellarine Peninsula and Indented Head to squatters, before folding in 1842.
Among the earliest known settlers in the vicinity of Portarlington was the former Hobart butcher, Henry Baynton, who was recorded there in the 1840's. Baynton established a cattle shipping service between Portarlington and Van Diemen's Land. He is believed to have had a station named Westham, which may have occupied a site near the derelict homestead now known as Lincoln's Farm, overlooking Point Richards. Baynton also had interests at Cowie's Creek (now Corio), across the Bay. Baynton possibly sold out to John Brown, who is identified as the owner of a Point Richards station in 1847. Other squatters known to have had property around the Portarlington area in the 1840's include William Booth, James Conway Langdon, and William Harding. In 1848 new land regulations were introduced, and the squatters' runs were subdivided into smaller allotments over the following years. By the early 1850's the era of the squatters had passed on the Bellarine Peninsula.
The township of Portarlington was formally surveyed around 1850 and was at that time named Drayton. It was renamed Portarlington in 1851, reportedly in honour of the English peer, Sir Henry Bennet, 1st Earl of Arlington, however it is also suggested, and perhaps seems more likely, owing to the number of early Irish settlers in the area, that the town was actually named after the town in Ireland bearing the same name, Portarlington, which was itself founded by Sir Henry Bennet in 1666. The newly surveyed township was neatly laid out, with broad streets, and planted with English elms and pines.
The first sale of town lots in Portarlington took place on 22 October 1851. It was described in the Geelong Advertiser newspaper as a "new township at Indented Head" and buyers were confident that it would quickly become "a place of importance". The first buyers were mainly speculators, so although the lots initially sold well, few purchasers settled on their lots, and the town was slow to fill.
A steam-powered flour mill opened in 1857, and after the destruction by fire of a competing mill in Drysdale. In 1861, development of Portarlington began to progress more rapidly. The mill owners built a private jetty and began receiving grain shipments from Geelong, and returning processed flour and bran. Around this time, the Bellarine Peninsula was regarded as the granary of the Victorian colony. A Post Office opened on March 1, 1863 (incidentally, known as Port Arlington until about 1866 but this may have been in error).
By 1865, the population of Portarlington had passed 200, and the town boasted two hotels and a blacksmith's shop. The Wesleyan congregation, who were the most numerous, built the town's first church in 1866. Before this they had conducted their services at the mill.
The Portarlington Pier was constructed in 1859, after a petition from local farmers demanding access to a public jetty, and it quickly became an important port of call for the network of steamers plying the Bay, both for goods and passengers. The first vessel servicing the direct run to Hobsons Bay, the Petrel, was reportedly doing a brisk trade by 1866, delivering hay, butter, eggs, cheese, potatoes, wheat, flour, geese, turkeys, poultry, bacon, pork, and pigs, and returning with supplies of tea, sugar, coffee, wine, beer, spirits, and other commercial items. The jetty was extended in 1870, allowing sufficient depth for shallow draft vessels to dock at any tide, and soon daily steamers from Melbourne were calling. The first to pick up passengers and cargo was the Despatch, in 1872. The direct run to Melbourne provided markets for large deliveries of potatoes and onions from around Portarlington, and lines of carts laden with produce were a common sight heading down to the port. At times up to eight or nine lighters would be loading at the jetty with cargo for Melbourne, as well as a steamer. The jetty was reconstructed in 1872, and storage sheds added.
Portarlington's picturesque setting and fine sandy beaches attracted visitors from Geelong and Melbourne, and the regular steamer service secured the town's progress as a popular seaside resort. A public bathing house existed from as early as 1868, and a replacement was built in 1877. Bathing on the open beaches was prohibited in early days "out of respect for public sentiment".
A brickworks was established in 1870, producing bricks, tiles, and pipes, from the high grade Portarlington clay, for local use, and was soon exporting to Geelong and Melbourne. When the flour mill closed down in 1874, the brickworks moved into the building. The brickworks seems to have ceased production during the depression in the 1890's.
There were 343 inhabitants in Portarlington in 1871.
The first State School in Portarlington (No. 1251) opened in the Wesleyan Church building in 1873, with 73 pupils. It was soon relocated to the Temperance Hall (built in 1874), after a dispute with church authorities. The new permanent red-brick school building, located on the current site, was formally opened on 27 Apr 1882, as State School No. 2455. It featured a bell-tower, a central fireplace, and two large rain-water tanks. A free public library opened in the ante-room of the Temperance Hall in 1883. A new and well-furnished building, purpose built for the library, was opened in 1884. A Market Reserve was established near the jetty in 1877.
The Anglican Church was built in Portarlington in 1883, and a Presbyterian Sunday school was constructed in 1888. The Catholic Church was completed in 1895, although it is believed that a Catholic school had been running in the town since the 1860s, and Mass may have previously been celebrated in a rented hall.
Horse racing began at Portarlington in 1859 on a track near the mill, but didn't generate much interest until the 1880's, when a new track was established to the west of the town. The new track was fenced-off in 1881, despite opposition from local graziers, and the Portarlington Turf Club was established in 1883, with an annual meeting held on Easter Monday. The track was close to the beach, and was knee-deep in sand in places. It was regarded as the heaviest track in the country.
The Portarlington Cricket Club was established in 1872, although the game had been played in the town for many years before. An Australian Rules Football club appeared in 1874. Tennis courts were built in the old park in 1896.
A permanent police station opened in Portarlington in 1875, although a trooper had been stationed in the town since 1871. The new station had no lock-up, so any prisoners had to be taken to Drysdale.
In 1887, a corner of the Market Reserve was allocated as the site for the new brick Post Office. Portarlington had enjoyed a postal service since the 1860's, however public agitation for a more centrally located facility had increased throughout the 1880's. A telegraph service began in 1882. A branch bank was also operating in the town by the 1880's. In 1882, Portarlington was described as an exceptionally clean town, with a variety of stores and traders, and a daily coach service ran to Geelong, via Drysdale. A rail service was also accessible from Drysdale. Five fishermen were operating out of the town at that time.
criterium series held at select locations around Port Phillip Bay in the New Year.