Although pastoral runs were taken up in the area as early as 1838, Trentham was first settled by gold prospectors in the 1850s, and later developed for its timber resources from the surrounding Wombat State Forest.

The township experiences large influxes of non-migratory birds, notably pelicans and falcons, which has led to them featuring on the towns crest and motto "Tu falco agitare et cum Pelicanis volare", roughly transcribed from Latin as "to drive a falcon and fly with pelicans".

[dubious – discuss][citation needed] Due to a fertile strip of red volcanic soil, grazing, and tourism, potato growing became the mainstays of the town's economy.

The coldest temperature recorded was –6.0 °C (not particularly low due to heavy cloud cover); sleet and snow are common in winter, with an average of 7.8 snowy days per annum.

[5] By mean maximum temperature, it is the coldest proper town in Victoria; only the isolated rural localities of Tolmie and Aberfeldy are colder.