It was originally known as View Hill estate, and was purchased in 1893 by David Syme, owner and publisher of The Age newspaper, who expanded it and gave it its present name, which is of Aboriginal origin. The name refers to "slow waters", describing the local arc in the Yarra River. The Post Office opened on 4 June 1900 and closed in 1957.
In 1954 Cistercian Monks from Ireland purchased one section of the property comprising 1,000 acres (4.0 km2), including the large house built by David Syme for his daughter and established Tarrawarra Abbey of the Order of Cistercians of the Strict Observance (Trappists). Since that time the community has built additional buildings including a large library in 2006. The monks support themselves by operating a beef farm and by Tarrawarra Eucharistic Breads.
Another section of the original estate today is TarraWarra Estate winery which opened in 1983 and which produces chardonnay and pinot noir.