The name Caloundra is thought to be named after the Aboriginal word 'Callanda' which means beautiful place in the Kabi language. However, there is some discrepency that it may be derived from the word 'Cullowundoor' meaning beech tree. It is thought that Caloundra was given this name because of the trees that grow on the headland of Caloundra Head. The first European settlers in the Caloundra area didn't arrive until 1862 as the land grab, which started in the early 1840s, had concentrated on the Darling Downs and the fertile lands north of the Brisbane River Valley. The first permanent settler in the area was John Ballinger who selected land for sheep-raising south of Lake Currimundi.
Perhaps the most important nineteenth-century settler was the explorer William Landsborough who, with a #2000 reward from the Queensland government, purchased 2372 acres of what is now Golden Beach, on Pumicestone Passage, in 1882. Although he only lived another four years, during which time he grazed sheep, Landsborough Shire is named in his honour.
It was during the 1880s that Caloundra began to acquire its reputation as a seaside resort. The first hotel was built in 1885 on Shelley Beach and by 1905 Wilson's Guest House offered holidays on Dicky Beach. A bakery was built in 1909 and the first general store appeared the following year. While the fertile inland soils were used to grow maize, oats, sugar and tobacco and the local dairy industry prospered, all Caloundra could offer was tourism. The first European to sight Caloundra area was Captain James Cook who in May 1770 named the Glass House Mountains. Matthrew Flinders followed in 1799. He entered the channel between modern day Caloundra and Bribie Island.