It was named for the colonial politician William Dalley and was located in the inner suburbs of Sydney, including Balmain, Glebe and Leichhardt.
For most of its history it was a safe seat for the Australian Labor Party, which held it without interruption from 1910 onward.
In the 1930s it was a stronghold of the radical Premier of New South Wales, Jack Lang.
Its most prominent member was Ted Theodore, who was deputy Labor leader and Treasurer in the Scullin government, having previously served as Premier of Queensland from 1919 to 1925.
Theodore was defeated in 1931 by the Lang follower and later Deputy Leader of Australian Labor Party (Non-Communist) Sol Rosevear, who was Speaker during the Curtin and Chifley governments.