Watsonia was surveyed by Robert Hoddle in 1838 as part of the parish of Keelbundora, for subdivisional sale as farms.

The Grace Park area was purchased in 1877 by Frederick Augustus Nell, and then by Frank Watson[3] in the early twentieth century.

Watson and other local landowners paid for the establishment of a railway station in order to attract property buyers.

[5] In 1931, 40 acres of land at Watsonia was purchased to build a novitiate for the Jesuit Order of the Roman Catholic Church.

[11] Watsonia Station is in Zone 2 on the Hurstbridge railway line and is currently served by Metro Trains Melbourne.

The most common countries of birth other than Australia are England 2.3%, China (excluding SARs and Taiwan) 2.0%, India 1.3%, Italy 1.0% and Sri Lanka 0.8%.

The Simpson Army Barracks, Yallambie was originally known as the Watsonia Military Camp during World War II.