The area was occupied by localised tribes of Indigenous Australians, the Boonwurrung people, for around 40,000+ years prior to European settlement, and was one of many sites around Melbourne where regular corroborees (meetings) were held.

Following British settlement from 1835 onwards, much of the Yarra River delta was drained to dry the land and enable agriculture, housing and grazing.

Through the late 19th and early 20th centuries, the park was used as a tip, a camp for the armed services, scenic drives, picnics, and many other forms of recreation.

During the early 1990s, the lake was drained to remove weed infestations, rubbish and other debris that had accumulated over the years, and the park was reclassified as a sporting reserve.

[3] This was met with much opposition, but the project went ahead and a host of sporting facilities were subsequently constructed and funding allocated to improve the parklands followed.

Vestiges of Albert Park's Aboriginal history still remain, the most noticeable being the large ancient river red gum tree, reputed to be the site of many corroborees.

It is thought to be over 300 years old, the oldest remnant tree in the Port Phillip area, located next to Junction Oval on the corner of Fitzroy Street and Queens Road, St Kilda.

The parkland, Albert Park Lake and Gunn Island provides a grassy wetland habitat for nearly two hundred bird species, both resident and transient.

Sightings of these swans at Albert Park Lake and across Victoria can be reported to myswan.org.au, a citizen-science project that enables users and researchers to track their movements across the state.

[6] Locally rare native bird species that have been recorded in the park include little egret, laughing kookaburra, Australian shelduck, Cape Barren goose, great crested grebe, white-bellied sea eagle and whiskered tern, while little ravens, Australian magpies, long-billed corella, sulphur-crested cockatoo, willie wagtails and magpie-larks are common.

A native revegetation area in the south east corner of the park features a large ancient river red gum known as the Corroboree Tree, a heritage registered eucalypt of cultural significance as a pre-European gathering place.

Albert Park is used a by a number of radio control model boat clubs throughout the year, except when access is unavailable due to the Grand Prix.