It has a diverse population which includes a wide range of ethnic backgrounds, a high proportion of retirees, and a large seasonal holiday influx.

The gently rising hills behind the town feature vineyards and olive groves, and offer spectacular panoramic views across Port Phillip Bay.

With direct ferry links to the city of Melbourne Portarlington also serves as a gateway to the historic towns and surf beaches of the Bellarine Peninsula.

The Port Phillip area was first significantly explored by Europeans in January 1802, when Lieutenant John Murray spent three weeks investigating the Bay entrance.

Ten weeks later, the English explorer, Matthew Flinders, camped at Indented Head, 6 km to the south-east of Portarlington, where he traded with Aboriginal inhabitants while undertaking a survey of the Australian coastline.

He subsequently landed several times briefly on the peninsula coast to take bearings, including at the location of Portarlington (where he shared lunch with Aboriginal people), and also at Point Richards.

In February 1803, the Surveyor-General Charles Grimes landed from his ship, the Cumberland, at Portarlington with an expedition and spent several days exploring the Bay coastline to Point Cook.

Batman wrote glowing reports of the pasture and grazing potential of the Bellarine Hills (which he named "Wedge's Range"), with a view of attracting interest in establishing sheep runs in the Port Phillip area.

When the first organised group of settlers arrived from Van Diemen's Land (Tasmania) aboard the Enterprize in August 1835, they sought out the well-watered northern reaches of Port Phillip, around the Yarra River.

When the holdings of the Port Phillip Association were allocated, the Bellarine Peninsula was allotted to the member, John Sinclair, who was the Superintendent of the Engineers' Depot in Launceston.

Sinclair was evacuated back to Melbourne from Point Henry and made no further effort to take up his allotted land, although he remained in the Port Phillip District.

By 1839 the Port Phillip Association had been bought out by the Derwent Company, which sold a number of runs on the Bellarine Peninsula and Indented Head to squatters, before folding in 1842.

The mill owners built a private jetty, and began receiving grain shipments from Geelong and shipping out the flour and bran produced.

The Petrel, the first vessel serving the direct run to Melbourne's Hobsons Bay, was reportedly doing a brisk trade by 1866, delivering hay, butter, eggs, cheese, potatoes, wheat, flour, geese, turkeys, poultry, bacon, pork, and pigs, and returning with supplies of tea, sugar, coffee, wine, beer, spirits, and other commercial items.

The jetty was extended in 1870, allowing sufficient depth for shallow draft vessels to dock at any tide, and soon daily steamers from Melbourne were calling.

The direct run to Melbourne provided markets for large deliveries of potatoes and onions from around Portarlington, and lines of carts laden with produce were a common sight heading down to the port.

Portarlington's picturesque setting and fine sandy beaches attracted visitors from Geelong and Melbourne, and the regular steamer service secured the town's progress as a popular seaside resort.

A brickworks was established in 1870, producing bricks, tiles and pipes from the high grade Portarlington clay, for local use, but it was soon exporting to Geelong and Melbourne.

The new track was fenced-off in 1881, despite opposition from local graziers, and the Portarlington Turf Club was established in 1883, with an annual meeting held on Easter Monday.

In more recent years the Seachange phenomenon has also made a notable impact on the town, with greater numbers of people buying property by the sea for lifestyle reasons or to enjoy their retirement.