Prior to European settlement, the area was occupied by the Ngarigo people, whose northernmost lands extended to the southern shore of Lake George and around the base of the steep escarpment lying to the west of what is now Bungendore.

[2][3][4] The first Europeans in the vicinity were members of the exploratory party of Dr Charles Throsby in 1820, who, along with Hamilton Hume, also originally explored the Braidwood area.

[11] In 1992 journalist Ian McPhedran wrote that Bungendore's locals and business sector had developed a method of community cooperation superior to most other Australian small towns.

Bungendore experiences a relatively sunny and dry oceanic climate (Cfb), similar to nearby Goulburn and Canberra.

Bungendore's location in a broad valley surrounded by the peaks of the Great Dividing Range to the east often protects the town from inclement weather such as severe thunderstorms, and heavy rainfall arriving from the Tasman Sea.

Bungendore is also affected by the strong rain shadow cast by the Brindabella Range, which blocks most precipitation arriving from the west and southwest.

Warm to hot summer days are often tempered by afternoon and evening easterly breezes, though the onset in Bungendore is later than in nearby Braidwood, New South Wales.

Severe heatwaves can occasionally affect Bungendore, since the town is far enough inland to escape the moderating effect of the Tasman Sea.

These heatwaves usually occur coincident with a blocking high pressure system in the Tasman Sea, and are most common from late December to mid February.

Mid to late January is the warmest time of year on average, similar to most centres in SE Australia.

Minimum temperatures in the summer months are usually comfortable thanks to regular easterly breezes, and lower dewpoints compared to the nearby coast.

Strong westerly winds can also result from low pressure systems centred in Bass Strait and Tasmania, independent of cold fronts.

Bungendore railway station is served by three daily NSW TrainLink Xplorer services in each direction operating between Sydney and Canberra.