The area takes its name from the Clarence Hotel that stood on the south-east corner of the intersection.
The hotel was erected by builder Thomas Hayselden and the hotel obtained its licence on 8 December 1863; the reason for the choice of name is not known but may have been named after the 500-ton steamship Clarence that plied between Brisbane and Sydney at that time.
[2][3] The Clarence Hotel was a popular spot with the bullock teamsters travelling along Boggo Road which was the shorter but hillier route to Ipswich.
By that time, the area had developed as a residential and commercial district and the new hotel was built to attract that clientele.
[4] However, its clientele are more likely to be drawn from the major Mater Hospital complex that now dominates the western and northern sides of Clarence Corner.