The municipality was proclaimed on 16 May 1860 and, with an area of 3.4 square kilometres, included the modern suburbs of Waterloo, Zetland and Rosebery.

"[8] The petition was subsequently accepted by the Government and the Governor Lord Belmore proclaimed the separation of the Borough of Alexandria and the reconstitution of Waterloo (Eastern and Northern Wards, which were abolished in favour of a single constituency) on 27 August 1868.

[11] The Victorian Italianate town hall, designed by architect Edward Hughes of the firm Thornley & Smedley.

As the suburbs of Sydney expanded south, the rural character of Waterloo gradually disappeared in favour of higher density and the growth of industry transforming it into a working-class area.

This transformation was described in The Sydney Morning Herald in 1887, which noted that: "Numerous industries are carried on in the borough, a very large amount of employment being provided for the residents.

In February 1909, council began planning for the South Sydney Hospital, with land provided in Zetland from the Cooper Family and a large bequest from local businessman and benefactor James Joynton Smith.

[21][22] In June 1921, council submitted a petition to abolish the wards created in 1895, which was accepted and proclaimed by Governor Sir Walter Davidson on 13 March 1922.

[29] The Sydney Corporation Amendment (Municipality of Waterloo) Bill was subsequently introduced and received its first reading in the NSW Legislative Assembly a few days later on 10 December.

It is a grossly improper and unfair thing, and the Minister knows it" while Lord Mayor Stokes (who sat in parliament as the Member for Goulburn) declared that he stood "for the progress and development of the city.

[34] In March 1940, three aldermen, former mayor John William Neilson, Ernest Navin and George Leslie Cohan, were each sentenced to three months gaol with hard labour for accepting bribes, where it had been found that they had taken bribes in order to register a company under the Noxious Trades Act 1902.

[38] By the end of the Second World War, the NSW Government had come to the conclusion that its ideas of infrastructure expansion could not be realised by the present system of the mostly-poor inner-city municipal councils and the Minister for Local Government, Joseph Cahill, passed a bill in 1948 that abolished a significant number of those councils.