The site of the village and surrounding areas was home to the Wiradjuri people prior to settlement, and the name "Mandurama" is derived from their word for 'water holes'.

The 60,000[clarification needed] Sunny Ridge property originally included the Mandurama town site.

Mandurama was established in 1876 as a privately owned village for the workers of Thomas Icely's Coombing Park.

[3] Mandurama has since developed, along with nearby Lyndhurst into a modest service centre for the surrounding localities and farmland.

Mandurama retains a number of historic buildings, including two former bank premises, a former primary school, the Lincoln Theatre, and the Belubula Lodge.