The town is located at what was once an important river crossing along the Travelling Stock route from Gippsland to the Snowy Mountains High Country dating from the 1840s.

[2] It was renamed Barnes Crossing in 1848,[2] by which time it had become an important waypoint on the stock route between Gippsland in Victoria and the Snowy Mountains in New South Wales.

The choice was ostensibly based on several criteria, including climate, food supply, land ownership and ability to support major industries,[7] although official investigators conceded the site was 'very rough', 'treeless', and 'somewhat exposed [to] high winds'.

[11] Dalgety's cause had strong advocates including the local member Austin Chapman, Andrew Fisher, and John Forrest, as well as more general support from Victoria.

[19] Situated on the Monaro Plains and in the rain shadow of the Snowy Mountains, Dalgety is a relatively dry area of rolling hills with granite boulders scattered across the landscape.