Prahran takes its name from Pur-ra-ran, a Boonwurrung word which was thought to mean "land partially surrounded by water".

More recently the word Pur-ra-ran has been identified as a transcription of "Birrarung", the name for the Yarra River, or a specific point of it.

[3] In 1837 George Langhorne named the area Pur-ra-ran, which was thought to be a compound of two Aboriginal words, meaning "land partially surrounded by water".

[9][10] The site was operated by the cut-price clothes and homewares chain Waltons for the next decade and was later developed into the Chapel Street Bazaar.

The area had a substantial Greek population and many took advantage of the rise in property values during the 1980s, paving the way for further development and a subsequent shift in demographics.

During the 1990s, the population increased markedly, with demand for inner-city living fuelling a medium-density housing boom, which continues in the area, as part of the Melbourne 2030 planning policy.

[1] Prahran is home to a large collection of architecturally significant commercial buildings, with many on the Victorian Heritage Register.

[13] It features a sunken oval surrounded by London plane trees and a Victory bronze statue.

From 1968 it was situated in a multi-storey building in High Street, demolished in 2017 for the construction by the Andrews government of a $25 million 'vertical' secondary college, next to Melbourne Polytechnic and the National Institute of Circus Arts, and which opened in 2019.

[15] Alumni include painters Howard Arkley, Douglas Baulch, Christopher Beaumont, Peter Churcher, William Dargie, Robert Jacks, William Kelly, David Larwill; printmakers Basil Hadley and Merris Hillard; designers Mimmo Cozzolino and Martine Murray; photographers Robert Ashton, Andrew Chapman, Susan Fereday, Bill Henson, Carol Jerrems, Tony Maskill, Leonie Reisberg, Stephen Wickham and sculptor Stuart Devlin.