It is 28 km (17 mi) and 29 minutes north-west of Melbourne's Central Business District, located within the Cities of Hume and Melton local government areas.

Diggers Rest began life as a stopping place on the road to the Bendigo goldfields, with the Post Office opening on 18 June 1860.

The town grew in the 1870s and 1880s and became a postal village with a general store, post office, weighbridge, mechanics' institute and a chaff mill.

Diggers Rest Primary School features excellent facilities including air conditioned and heated classrooms, computer and Internet access to all grades, modern sports and playground equipment and landscaped grounds.

Other facilities in the Diggers Rest area include the Holden Flora and Fauna Reserve, Animal Land Children's Farm and SPSK Jadran, and a Slovenian social club which services nearby St Albans and Keilor.