The town is located on the Northern Highway, in the Shire of Mitchell local government area, 90 kilometres (56 mi) from the state capital, Melbourne.

[1] The traditional owners of Pyalong are the Taungurung people, a part of the Kulin nation that inhabited a large portion of central Victoria including Port Phillip Bay and its surrounds.

The first Europeans to settle in the area were Captain George Brunswick Smyth and Lieutenant Alfred Miller Mundy who were operating the Pyalong station by August 1838, and William Hamilton who occupied the adjacent Glenaroua run at the same time.

[3][4] The town itself was surveyed and proclaimed in 1854,[5] and was sufficiently populated for the Post Office to open on 1 November 1858.

[7] Golfers play at the course of the Pyalong Golf Club on the Northern Highway.