Before European settlement, the area around Port Phillip was divided between the territories of the Wathaurong (west), Wurundjeri (north) and Boonwurrung (south and east) people, all part of the indigeous Kulin nation.

Thirty years later, settlers from Tasmania returned to establish Melbourne (now Victoria's capital city) at the mouth of the Yarra River in 1835, and Geelong at Corio Bay in 1838.

Settler records indicate an oral history with at least 18,000 years of linearity when Boonwurrung Elder Ningerranarro spoke of his ancestors hunting kangaroo and possum where the Bay now lies.

[8] "The earth-quake appears to have been confined to the southern portion of the colony, and principally to those places bordering on Bass's Straits and Port Phillip Bay.

Telegrams to the Argus from Cowes, Flinders, Kangaroo Grounds, Mornington, Queenscliff, Eltham, Lilydale, Shoreham, and Cape Schanck, all mention the earthquake.

"Anthonys Nose is an escarpment landform of Devonian granite on the Mornington Peninsula that is located where Arthurs Seat ends as the mountain falls steeply towards Port Phillip and is part of the Selwyn Fault.

Grant gave the name "Governor King's Bay" to the body of water between Cape Otway and Wilsons Promontory, but did not venture in and discover Port Phillip.

This initially friendly encounter started with trading, eating, and gifting, and was suddenly interrupted by a violent ambush by a large group of Aboriginal people.

Watching from the boat, Murray ordered grapeshot and round shot to be fired from the carronades aboard the ship at the fleeing Aboriginal people.

[18] As a result of Murray's and Flinders' reports, King sent Lieutenant Charles Robbins in HMS Cumberland to explore Port Phillip fully.

[19] King decided to place a convict settlement at Port Phillip, mainly to stake a claim to southern Australia ahead of the French.

[21] On 25 November the first white child was born in Victoria and was baptised on Christmas Day, receiving the name of William James Hobart Thorne.

When Collins left Port Phillip, the Calcutta proceeded to Sydney, and the Ocean to Risdon Cove in Tasmania, where they arrived on 15 February 1804.

Buckley took up residence in a cave near Point Lonsdale on the western side of the bay's entrance, The Rip, and later lived with an Aboriginal Australian group for many years, being given up for dead.

The more swampy western shores of the bay were not so favoured, and have been used mainly for non-residential purposes such as agriculture, the Point Cook Royal Australian Air Force base and the Werribee Sewage Farm, and significant nature reserves.

The eastern side of the bay is characterised by sandy beaches extending from St Kilda, Sandringham, Beaumaris, Carrum, and down the Mornington Peninsula to Frankston, Safety Beach/Dromana and Rye to Portsea.

Numerous sandbanks and shoals occur in the southern section of the bay, and parts of the South Channel require occasional maintenance dredging.

The region has an oceanic climate (Köppen Cfb) with warm summers possessing occasional very hot days due to northerly winds and mild winters.

Annual rainfall, which is evenly distributed over the year, shows considerable variation due to the Otway Ranges to the southwest: the northwestern shore of the bay is the driest part of southern Victoria and almost approaches a semi-arid climate (BSk) with a mean annual rainfall as low as 425 millimetres (17 in) (comparable to Nhill or Numurkah), whilst the eastern shores less shielded by the Otways receive as much as 850 millimetres (33 in).

Port Phillip is often warmer than the surrounding oceans and/or the land mass, particularly in spring and autumn; this can set up a "bay-effect rain", similar to the "lake effect snow" seen in colder climates, where showers are intensified leeward of the bay (particularly in Melbourne's eastern suburbs).

Salt marshes in the northwestern sections of the bay, such as that in the Werribee Sewage Farm and the adjacent Spit Nature Conservation Reserve, are within the Port Phillip Bay (Western Shoreline) and Bellarine Peninsula Ramsar Site, listed as wetlands of international importance under the Ramsar Convention, and the critically endangered orange-bellied parrot is found at three wintering sites with saltmarsh habitat around Port Phillip and the Bellarine Peninsula.

Port Phillip contains 3 Marine Sanctuaries managed by Parks Victoria to protect and conserve the bay's biodiversity, ecological processes and the natural and heritage features.

His subject was his earliest recollections of an idyllic boyhood spent at Arthur's Seat Run, location of the historic McCrae Homestead on the southern shore of the bay, part of the Mornington Peninsula.

In 1939, Charles Daley read an article before the Royal Historical Society of Victoria based on these letters, which was published in its journal in 1940 the year after a large bushfire in January 1939 hastened the disappearance of much of the original surviving wildlife from the area.

[35] The animals he observed as a young boy were "immense droves of kangaroos, brush kangaroos or wallaby, paddy-melon, bandicoots (two varieties), great opossum (two varieties), ring tail, flying squirrel, flying mouse, dingoes or wild dogs in the gullies, that were caught in box traps with sliding doors, porcupine ant eater or echidna that were at the back of Arthur's Seat mountain, the great iguana, tree lizard- 5 feet, python, and the rock or sleeping lizard."

In the swamps (which have since been filled in) were "The Nankeen bird with one long white feather behind the ear, The rail, The bittern, The snipe and jack snipe, Several ducks- wood duck, black duck, Teal, Spoonbill, Black swan Geese, Cranes, Blue and white coots, Water hens, Kingfishers here and there and swamp or ground parrot with the barred tail feathers."

[43] Unlike in Portland and on Great Ocean Road, Southern Rights in eastern Victorian waters are still critically endangered[27] and in very small numbers; however, presences of cow-calf pairs in the bay in recent years indicate that Port Phillip was possibly once a wintering/calving ground for these whales.

[52] In 2008, the owner and master of Hong Kong-registered container vessel MV Sky Lucky were found liable for illegally disposing garbage into Port Phillip, convicted and fined $35,000.

[53] An Environmental Management Plan has been adopted for 2017-2027 in order to improve and ensure the water quality is helping the marine life flourish as well as divide the supervising of the Bay between the government, community and industries.

Port Phillip's mostly flat topography and moderate waves make perfect conditions for recreational swimming, kitesurfing, windsurfing, sailing, boating, snorkeling, scuba diving, stand up paddle boarding (SUP) and other sports.