The town was settled by Lutheran migrants largely from in and around a small village then named Kay in Prussia and now known as Kije, Lubusz Voivodeship in Poland.
Most moved out of Adelaide and to the Barossa Valley and settlements in the Hills such as Hahndorf, living in socially closed communities, by 1842, and did not participate in government until 15 years later.
[4] German influence is apparent in Hahndorf and is seen in the traditional fachwerk architecture of the original surviving buildings.
Due to the First World War in Europe, in 1917 the South Australian Government changed many German place names.
[5] Hahndorf was re-instated as the town's name with the enactment of the South Australia Nomenclature Act of 1935 on 12 December 1935.
The Hahndorf Bowling Club was established in 1976 and has a full size (nine rink) green, which is a woven carpet surface enabling all weather competition, and a large clubhouse.
The (soccer) Football Club was formed in the early 1980s and plays home games at "Pine Avenue".