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Originally inhabited by the Kulin people, a grazing run was established in the settled district east of Melbourne in the early 1840s, for which the lease was taken up by farmers John and Archibald McMillan. Scotchman’s Creek Run, as it became known, was named after the Scottish settlers in the area in and near the run (including the McMillan, Campbell, and McPherson families). By 1853, Scotchman’s Creek was known as South Yarra Creek, due to the well known South Yarra Pound (built in the area in the early 1840s on behalf of the government to collect stray livestock) and the associated South Yarra Inn. Part of the Parish of Mulgrave, County of Bourke, Oakleigh was first surveyed in 1853, and the first blocks of land were sold soon after. Oakleigh Post Office opened on 1 August 1854.
The Shire of Oakleigh was created in 1871 and a boom in settlement followed the opening of the Melbourne-Oakleigh railway line in 1877.
Oakleigh, along with Dandenong, soon became one of the closest large cities to Melbourne, and the key to its development was the railway line to Melbourne. Railway workshops, brick works (until 1953, the area supplied 20% of Melbourne’s bricks), sand mining, and market gardens became the most important industries in Oakleigh at the end of the 19th century. The suburb contributed greatly to Melbourne’s rapid growth, and as a result, Oakleigh has a legacy of many large old buildings and institutions, mostly located between the railway line and the main road at Dandenong Road (which once serviced the city).
The Oakleigh Hall (formerly the Mechanics’ Institute) which once served as the town hall (1906), post office (1924) and courthouse (1934) still remains, as does a grandstand of the cricket and football oval. The Sacred Heart Church, a large Edwardian church with its twin copper dome, is still a landmark of the area and is now part of a school.
Oakleigh’s urban potential was increased by the addition of part of Caulfield, comprising present day Hughesdale, in 1913. In 1924 Oakleigh was proclaimed a town and on 2 August 1927, a city. By then the Oakleigh area was substantially built up, and housing was extending to Hughesdale and Huntingdale (East Oakleigh) in the vicinity of their railway station. At the close of the war these areas were described as rising suburbs. Because the land in Oakleigh South was sandy and fairly flat – suitable for golf courses – Oakleigh South was the home of Sand Belt private golf courses such as the Metropolitan, Commonwealth, and Huntingdale Golf Clubs.
The Convent of the Good Shepherd occupied the northernmost boundary of the city until it was demolished in 1984 to make way for the extensions of Chadstone Shopping Centre. Chadstone Shopping Centre opened in 1960 and was constructed on land that was initially leased from the Good Shepherd Sisters for 99 years. In 1983 the whole site was purchased from the congregation. Chadstone Shopping Centre is now part of Malvern East. Chadstone Shopping Centre was built about 1.5 kilometres from the Oakleigh shopping centre. Although trading in the three or four active street in the Oakleigh shopping centre was maintained with one-way traffic and pedestrianisation, the contrast with climate-controlled Chadstone was apparent.
The Oakleigh General Cemetery was in operation from 1860 until 1960. It is situated in Oakleigh Pioneer Memorial Park.
The Oakleigh library, now a branch of Monash Public Library, was moved to its current location on Drummond Street in 1967 and a new foyer integrated it with the old Mechanics Institute Hall and Senior Citizens rooms.
Oakleigh Primary School No. 1601 was established in 1875. The lower-school is situated in a renovated building (first opened in 1914). The middle and upper school are situated in the modern building (opened in 1977). The school opened a purpose-built kindergarten in 2005 for 3- and 4-year old children.
The Oakleigh Motel, the first of its kind, and an example of Googie architecture, was opened in time for the 1956 Summer Olympics. The building was on the Monash Council heritage register, but despite this the council granted permission to demolish it. Heritage Victoria has since granted provisional heritage status to the building. The motel ushered in an era when the motor car dominated the city as Melbourne sprawled and expanded to absorb Oakleigh and also Dandenong into its ever expanding south-eastern conurbation.
Oakleigh was defined as a Major Activity Centre as part of the Melbourne 2030 planning policy.