It is surrounded by the suburbs of Elizabeth Bay, Darlinghurst, Paddington and Darling Point.

After British settlement, the area was first known as 'Rush Cutting Bay' because the swampy land was covered in tall rushes used by early settlers for thatching houses.

On 6 April 1927 Herbert Pratten, Federal Minister for Trade, appeared in a Lee DeForest film to celebrate the opening of a Phonofilm studio in Rushcutters Bay.

[4] In the 20th century, when neighbouring Darlinghurst was seen as down-at-heel, some businesses and residents abutting that boundary would, for appearance's sake, list their addresses as being in Rushcutters Bay.

[5] The bay at Sydney Harbour served as host for the sailing events during the 2000 Summer Olympics.