[4] The British first entered the region in March 1837, when several land-holders came upon Lake Colac while searching for the missing colonist Joseph Gellibrand.

Another larger search party, which was acting on information that local Gulidjan had killed Gellibrand, arrived in April.

This group returned to Geelong after two Gulidjan people were killed by Aboriginal trackers accompanying the party.

[5] Settlement of the area began in September 1837 with the arrival of grazier Hugh Murray (died 1869) who selected 14,000 ha (34,000 acres) of land and established three sheep stations: Warrion, Elliminyt and Barongarook.

In 1854 town founder Hugh Murray employed a couple of shepherds named Thomas Brookhouse and Patrick Geary.

Fifteen years later a boy out rabbiting found the skeletal remains of Thomas Brookhouse under a pile of rocks near Lake Corangamite.

A plaque on the southern side of the Memorial Square commemorates two historic speeches given on consecutive nights in Colac, beginning on 31 July 1914 with the then Federal opposition leader, Andrew Fisher, and followed the next night by the Prime Minister Joseph Cook.

[17] Also held at the Memorial Square is the annual Colac KANA festival taking place on the third Saturday of March.

[18] On the last week-end of October, first weekend in November the Colac Otway Arts Trail takes place.

[19] With a wealth of natural resources, such as agriculture and timber, Colac has a strong manufacturing background, with major local employers including Bulla Dairy Foods, Australian Lamb Company, and AKD Softwoods.

Colac has a temperate mediterranean climate (Csb) with mild summers and cool damp winters, with chilly nights year round owing to its far southern location on the Australian mainland.

In addition to the Ballarat service, a local repeater on nearby Warrion Hill provides an alternative source of television reception.

As of August 2022, Television channels available include Southern Cross 10, 10HD, 10 Bold, 10 Peach, 10 Shake and Sky News Regional.

FM radio services direct from Melbourne and Geelong can be received in Colac but signal levels are low.

Television services direct from Melbourne can be received in Colac but large antenna arrays must be used with mixed results.

[29] Colac has a swimming club which trains swimmers and has athletes competing at Region, State and national competitions.

The Colac Otway Rovers conducts a Small Sided Football Program for juniors and an indoor soccer competition.