In 1851, even before the colony of Victoria acquired full parliamentary self-government, Governor Charles La Trobe instructed the colonial surveyor, Robert Hoddle, to select a site for the colony's new parliament to meet. Hoddle selected a site on the eastern hill at the top of Bourke Street, which at that time, when few buildings were more than two storeys high, commanded a view of the whole city. A competition was held for a design for the building, and John Knight's design won the first prize of £500, but was not used. The government architect, Charles Pasley, subsequently came up with a design of his own. Subsequent observers have suggested that he borrowed heavily from Leeds Town Hall, which even today is widely considered to be among the finest civic buildings in the world. The design was later modified by an architect in his office, Peter Kerr. Construction of the project was managed by John Knight who was also on Casley's staff. The building is an example of Roman Revival architecture.
In December 1855 construction began on the site in Spring Street, and the building was completed in stages between 1856 and 1929. The chambers for the Victorian Legislative Assembly and the Victorian Legislative Council were finished in 1856, at which time Bourke Street ran between the two chambers. The library was completed in 1860, and the Great Hall (now Queen's Hall) and the vestibule in 1879. In the 1880s, at the height of the great boom fuelled by the Victorian Gold Rush, it was decided to add a classical colonnade and portico facing Spring St, which today gives the building its monumental character. This was completed in 1892. The north wing was completed in 1893 and refreshment rooms at the back of the building were added in 1929.
Despite its protracted construction and evolution of the design, the building today feels very much a single entity. The flow of the rooms, particularly taken in context with the main facade leading to the Queen's Hall and the parliamentary chambers, is both logical and visually impressive.
Pasley and Kerr's design included plans for a dome, but these were abandoned when a sharp depression began in 1891, and the dome was never built. From time to time governments have expressed interest in completing the building by adding the dome, but have been deterred by the enormous cost. The Kennett government, elected in 1992, set up a committee to examine building the dome. In 1996, Kennett and the then Opposition Leader John Brumby, reached an agreement for the building to be completed by the turn of the century but the idea was abandoned when the trade unions would not guarantee that the project would go ahead without industrial disputes.
From 1901 to 1927 Parliament House was the home of the Commonwealth Parliament, since the new capital city envisaged in the Australian Constitution did not yet exist and there were long delays in finding a site and beginning construction. During these years the Victorian Parliament met in the Royal Exhibition Building in Carlton. Many of the major events of the early federal period took place in this building, including the formation of the Federal Parliamentary Australian Labour Party, the "fusion" of the Free Trade Party and the Protectionist Party into the first Liberal Party in 1909, the declaration of the Great War in 1914, and the split in the Labour Party over conscription in 1916. The building is also notable in having the first set of electrical bells used to call members to divisions (installed circa 1877).
In 2005–2006, the Parliament celebrated its 150th anniversary.