Fort Scratchley is situated atop Flagstaff Hill, overlooking the Tasman Sea and the Hunter River, less than 1 km (0.6 mi) from the Newcastle central business district.

Originally built as a coastal defence fort, it is located in a commanding position, guarding the Hunter River estuary.

The government wanted to ensure that the site was repaired correctly as it sees it as a special place in Australia's military history.

Lieutenant John Shortland had come upon the land while looking for rogue criminals, but his pursuits were unsuccessful and instead he found fragments of coal at the base of the hill.

Flagstaff Hill continued to be the home of coal exportation throughout the early 19th century, until the army claimed the land in 1843.

It was designed by Lieutenant-Colonel Peter Scratchley, after whom the fort was named and included three 9-in Rifle Muzzle Loader (RML) guns and a casemated battery of four 80 pounders.

During World War II, the fort was further upgraded with the extension of the Battery Observation Post and provision of Searchlight Directing Station and blast walls were constructed in 1942.

[1] In 2015, the Fort's sole Nordenfelt gun was restored to fully functional condition and is fired on special occasions from its position in the underground casemate.

Both were restored by the Fort Scratchley Historical Society in 1992 and are capable of being fired on special occasions for ceremonial and saluting purposes.