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It was incorporated as a Crown settlement in 1837, and named after the then British Prime Minister, William Lamb, 2nd Viscount Melbourne.

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A short-lived penal settlement was built at Port Phillip, then part of the British colony of New South Wales, in 1803, but it was not until 1835, with the arrival of free settlers from Van Diemen's Land (modern-day Tasmania), that Melbourne was founded. Of the five peoples of the Kulin nation, the traditional custodians of the land encompassing Melbourne are the Boonwurrung, Wathaurong and the Wurundjeri peoples. The area of Melbourne has been home to Aboriginal Victorians for over 40,000 years and serves as an important meeting place for local Kulin nation clans. It has a population over 5 million (19% of the population of Australia, as per 2021 census), mostly residing to the east side of the city centre, and its inhabitants are commonly referred to as 'Melburnians'. The city occupies much of the northern and eastern coastlines of Port Phillip Bay and spreads into the Mornington Peninsula, West Gippsland, as well as the hinterlands towards the Yarra Valley, the Dandenong and Macedon Ranges. Its name generally refers to a 9,993 km 2 (3,858 sq mi) metropolitan area known as Greater Melbourne, comprising an urban agglomeration of 31 local municipalities, although the name is also used specifically for the local municipality of City of Melbourne based around its central business area.

Melbourne ( / ˈ m ɛ l b ə n/ ( listen) MEL-bən Boonwurrung/ Woiwurrung: Narrm or Naarm) is the capital and largest city of the Australian state of Victoria, and the second-most populous city in both Australia and Oceania.