Before European settlement, the area in which Canberra would eventually be constructed was seasonally inhabited by Indigenous Australians. Anthropologist Norman Tindale suggested the principal group occupying the region were the Ngunnawal people, while the Ngarigo lived immediately to the south of the ACT, The Wandandian to the east, the Walgulu also to the south, Gandangara people to the north, and Wiradjuri to the north west. Archaeological evidence of settlement in the region includes inhabited rock shelters, rock paintings and engravings, burial places, camps and quarry sites, and stone tools and arrangements. The evidence suggests human habitation in the area for at least 21,000 years.
European exploration and settlement started in the Canberra area as early as the 1820s. There were four expeditions between 1820 and 1824. White settlement of the area probably dates from 1824, when a homestead or station was built on what is now the Acton peninsula by stockmen employed by Joshua John Moore. He formally purchased the site in 1826, and named the property "Canberry".
The European population in the Canberra area continued to grow slowly throughout the 19th century. Among them was the Campbell family of "Duntroon"; their imposing stone house is now the officers' mess of the Royal Military College, Duntroon. The Campbells sponsored settlement by other farmer families to work their land, such as the Southwells of "Weetangera". Other notable early settlers included the inter-related Murray and Gibbes families, who owned the Yarralumla estate—now the site of the official residence of the Governor-General of Australia—from the 1830s through to 1881.
The oldest surviving public building in the inner-city is the Anglican Church of St John the Baptist, in the suburb of Reid, which was consecrated in 1845. St John's churchyard contains the earliest graves in the district. As the European presence increased, the indigenous population dwindled, mainly from disease such as smallpox and measles.
The district's change from a New South Wales (NSW) rural area to the national capital started during debates over Federation in the late 19th century. Following a long dispute over whether Sydney or Melbourne should be the national capital, a compromise was reached: the new capital would be built in New South Wales, so long as it was at least 100 miles (160 km) from Sydney, with Melbourne to be the temporary seat of government (but not referred to as the "capital") while the new capital was built.