Prior to the European settlement of Australia, the river was an important place for the Boro gundidj, a tribe of the Wathaurong Indigenous Australian people as they based themselves around its northern stretches.

[7] At the present-day site of Ballarat, the river was "three to four yards wide" and "clear and limpid... teeming with the native blackfish".

During the 1860s, much of the river and its tributaries were sealed as drains using quarried bluestone to prevent erosion and help mitigate frequent flooding.

In 1869 a serious flood of the Yarrowee River put most of the lower section of the city including Bridge and Grenville Street underwater causing the loss of two lives.

Since the 1980s, major initiatives have been undertaken to restore the river's state and vegetation and several natural wetlands have also been re-established along its course.

[15] The latter gives rise to alternative theories including a derivation of Yarrow Water, Scotland, attributed to the early Scottish settlers of the area.

The pollution was due to sediments running from a development site in Brown Hill, owned by Vista Estate Pty Ltd, towards the River causing a decline in water quality and risk for flora and fauna in the long term.

[16] After more than ten months of actions deemed insufficient by EPA, the latter took Vista Estate Pty Ltd to the Supreme Court and the company has been issued an order to reinforce their control to minimise the risk of discharge of sediment into the river.