The name of Millmerran is said to be of aboriginal origin from “Meel” the eye, and “Merran” to look out. The name was suggested to Edward Walpole by Mr A Metson, who was a recognised authority on aboriginal speech. Mr Metson advised that the first syllable of the name could be pronounced Mill although “Meel” is the correct sound as given by the local aboriginal people.
European settlement in the Millmerran area began in 1841 when the Gore brothers established the vast Yandilla station. Yandilla station covered an estimated 1,780 square kilometres (690 sq mi) and hosted its own school with 20 to 30 students, telegraph station and store. Closer settlement began after the passing of the Crown Lands Alienation Act in 1876, which allowed Edward Walpole to select a portion of Yandilla station. In 1881, Walpole established a general store on the site of what was known at the time as Back Creek. In 1883 the area was known as Domville. The name was again changed to Millmerran on 16 November 1894.