The name is derived from Al-Hambra, the Red Palace, an ancient fortress of the Moorish monarchs of Granada in southern Spain.

[4] In mid-January 1869, she was passing Kent Group when her screw shaft broke, and despite the difficult conditions, the captain succeeded in making land near Cape Howe.

In 1883, it was purchased by Samuel Marsden of Blayney, who had recently acquired a large plot of land in Kimberley and intended to use the steamer to deliver a shipment of sheep.

[7] On 7 July 1885, an 82-year-old seaman named Henry Johnson was thrown over the wheel of the Alhambra during a storm, suffering spinal injuries and paralysis of the lower extremities.

[8] On 7 December 1886, a labourer named John Van Rampan fell down the hold of the ship Alhambra, a depth of about 10 feet (3.05 m).

[9] In June 1888, the Sydney Marine Board warned of a derelict about eleven miles northeast of Newcastle that posed a potential shipping hazard.

Arrangements were completed shortly before 4 o'clock in the afternoon, and the steamer was just about bringing up to the desired position when she fouled the derelict about amidships.