The first inhabitants of what is now Mansfield Shire were the Taungurung people, whose lineage stretched back for perhaps thousands of years. Their lives changed when, during the 1840s, settlers occupied land west of Mansfield. By the end of the decade, occupation had spread eastwards.
In 1850 local station holder, Alfred Chenery, built a blacksmith's forge near the intersecting boundaries of four pastoral stations at Fords Creek, providing a convenient stopping place for travellers. The following year, land was set aside there for a surveyed township.
Originally named Mount Battery, the name was changed to Mansfield in 1856 at the prompting of a local station manager who apparently had fond memories of Mansfield, near Sherwood Forest, Nottinghamshire, England.
The gold rush struck around 1856 after gold was discovered in the Jamieson River, and later at Woods Point. Small amounts of gold were also discovered around Mansfield. The most suitable route for transporting mining machinery was through Mansfield.
Mansfield Shire was first proclaimed on 31 December 1866, when the township had two schools, two hotels, a court house, a steam flour mill and a hospital. The area also successfully cultivated fruit, potatoes and oats, in addition to sheep grazing and dairying.
After more than a decade of lobbying, a branch railway line was opened in 1891 from Tallarook to Mansfield. The line provided improved access for agricultural products to the Melbourne markets.
In 1919 part of the Howqua Shire was added to Mansfield Shire, increasing its area by 50%. As well as adding mining areas to the Shire, Howqua had large forest areas.
During the 1920s local interest in nearby Mt Buller began to open the area up as a tourist resort. The post war development of the Mount Buller Snow Resort added substantially to Mansfield as a tourist destination.
The development of Lake Eildon to the west as a boating and recreation site also brought tourism to Mansfield. In 1964 the State tourism authority began promoting Mansfield as the ‘Gateway to Leisureland’.
Mansfield has also benefited from horse-riding holidays in the mountains to the east. Indeed, "The Man from Snowy River" was filmed around Mt Buller and Merrijig in 1982.
The main shopping street continues to be enlarged by several new groups of shops. The railway station precinct now houses the Visitor Information Centre and Historical Society.
Mansfield's town census population was recorded as 385 for 1871 and 1,110 for 1911.
The Shire's census population was recorded as 2,344 for 1871 and 3,800 for 1891.
The Mansfield Shire was amalgamated with the City and Shire of Benalla on 18 November 1994 to form the Delatite Shire. Much lobbying was undertaken by the community to "get our Shire back", and on 28 October 2002, after the de-amalgamation of the Delatite Shire, Mansfield once again became its own Shire.