The headland now known as Cape Byron is more than 200 million years old, forming part of the world's oldest caldera: the rim of a gigantic extinct volcano. It remains an important sacred site to the local Arakwal and Bundjalung people. What we now call Byron Bay was called 'Cavvanba' by the Bunjalong people and was the common territory at the junction of the group's northern and southern tribes. Byron sits on what used to be a swamp, some of which still exists in the paperbark forest to the west of the town.
Captain James Cook 'discovered' the cape for Britain in 1770, naming it after navigator Vice Admiral John Byron. The first white settlers arrived in the region in the late 1840s.
Some of the early cedar cutters became the first permanent settlers in the region in the 1860s. When legislation was passed in 1861 that enabled anyone to select a block of Crown land at one pound per acre, the first European land owners, known as 'selectors', settled in the area. In 1888, the first post office was established. In the same year, a jetty was opened at Byron Bay and quickly became a busy shipping centre to transport timber and agricultural products. Nearing the turn of the century, the name of the town changed from Cavvanba to Byron Bay and in 1894, the railway route between Lismore and Murwillumbah opened.
Construction of the Cape Byron lighthouse, which began in 1899, was complete by 1901. A major event for the district, special trains carried visitors from Lismore and Murwillumbah for the opening by the Premier of New South Wales. Byron quickly began growing into a 'real town' with the emergence of hotels, stores and sporting groups. By the time of World War I, Byron had a population of 1500. The first electricity to the town was switched on in 1926 and work on a new jetty built to accommodate rail carriages was complete by 1929.
Land values began to skyrocket in the prosperous period following World War II. In 1954 a cyclone demolished more than 180m (600ft) of the Byron Bay jetty, crippling the local fishing industry but igniting more progressive approaches to environmental issues, which have since become entrenched in the fabric of Byron's society.
With whale oil and meat becoming valuable commodities, the first whale was caught off Byron in 1954. Within eight short years, whale numbers had plummeted and the industry was no longer sustainable. The focus changed from primary production to ecotourism, permaculture, alternative medicine, bush tucker farming, music and the arts. Surfing culture flourished in the 1960s and 1970s, while the Aquarius Festival in Nimbin in 1973 put the area on the map as a mecca for hippies.
By the early part of the 21st century, Byron Shire had grown to a population of close to 30,000, while the town of Byron Bay had a population of about 9000. Byron continues to be a home for residents from all socio-economic backgrounds and walks of life. It is famous for its laid-back and alternative lifestyle, but also has a higher proportion of 'baby boomers' than any other town in Australia. Events such as yoga retreats, pagan gatherings, raves and music fesitvals, including the East Coast Blues & Roots Music Festival and Splendour in the Grass, are based in Byron Bay. The area is also noted for its wildlife, with the whale watching industry a significant contributor to the local economy.