Karridale was established as a timber mill in 1884 by M. C. Davies who saw the potential from large virgin forests of Karri trees (Eucalyptus diversicolor) in the area.

A second jetty at Flinders Bay to the south supported the shipping operations when the weather was unsuited for loading on the west facing coastline.

A major storm in 1900 which destroyed the Hamelin Bay jetty as well as a downturn in demand for timber in the early 1900s meant that the industry went into decline and the last mill was closed in 1913.

[5] During the 1920s, Premier James Mitchell established the Group Settlement Scheme, which brought British settlers out to Western Australia with the aim of settling some of the underdeveloped areas of the state.

Group 4 were sent to Karridale, and consisted of about 20 families who received a 160-acre (0.65 km2) block and a grant of £10 for the purchase of necessities plus an allowance of 10 shillings per day.