The annual Clunes Booktown Festival began in 2007 and draws significant tourism to the area, with over 10 book shops around the town.

This was due to the introduction of European occupation and diseases;[2] for example, 6–10 tribesmen were killed in the 1839 Blood Hole massacre at the nearby Glengower station.

They included overlander Donald Cameron, who took up a 12,000 ha (120 km2) run in mid-1839 and named it Clunes for his Scottish hometown, building a homestead in the 1850s.

[2][4] In March 1850, a party of four, including Cameron and his friend William Campbell MLA, found traces of gold on his station.

[5] In April 1851, German physicist George Hermann Bruhn arrived at Clunes while on a journey to examine the Colony of Victoria's mineral resources and was shown specimens of gold by Cameron.

[10] The idea of transforming Clunes into a European-style booktown was first conceived and developed by Councillor Tim Hayes, Linda Newitt, Graeme Johnston and Tess Brady.

[11] The event has won recognition and awards, including:[citation needed] Between 2000 and 2008, Clunes underwent a noticeable transformation and rejuvenation[12] following the decision by Wesley College, Australia's largest co-educational private school, to establish a campus for Year 9 students in the town.

Opened in 2000, about 80 students take up residency in the Wesley Clunes Residential Learning Village in the centre of town and become part of the local community for an eight-week period each term.