The region was originally occupied by the Bibbulmun people who knew the area as Wandergarup, which in their language meant 'plenty of water'.

[3] Following an expedition to the area in 1861 by Edward Reveley Brockman, his brother-in-law Gerald de Courcy Lefroy and his uncle Pemberton Walcott, in 1862 Brockman established Warren House homestead and station on the Warren River; Walcott, after whom the town would be named, established Karri Dale farm on the northern outskirts of the later townsite; and Lefroy established a farm and flour mill on Lefroy Brook (the current site of the 100 Year Forest).

By 1868 he was at Dwalganup Station near Boyup Brook, and in 1872 Karri Dale was for sale, marketed as a "four-roomed brick cottage, stockyards, cattle shed, good garden - stocked with fruit trees and permanent running water".

During the 1980s, Pemberton began to grow as a tourist town and tourism, particularly domestic, continues to play a key role.

Viticulture has become widely established, with many investment schemes buying up large areas of pastureland and converting to vineyards.

Pemberton is surrounded by karri forest with five national parks within 20 minutes' drive and has plenty of rivers, streams and dams for recreation.

The Karri Forest Explorer Drive,[15] developed by the Department of Environment and Conservation, links the tourist attractions with sealed and unsealed roads.

The Falls are the break between the Darling Scarp and the Scott River Plain and the tourist drive is sealed with caravan parking.

Further west is Black Point, in the far north-western part of the D’Entrecasteaux National Park between Augusta and Windy Harbour.