The town is named after the Arthur River, which flows through it, a headwater of the Blackwood River. The river was named by Governor James Stirling in October 1835 after Arthur Trimmer who was a member of the exploring expedition led by the Governor. Trimmer arrived in Western Australia in April 1831 and selected land at York. In 1836 he married Mary Ann, one of King George Sound Government Resident Sir Richard Spencer’s daughters.
Following the introduction of convicts in Western Australia labour to the Swan River Colony in the early 1850s, the road from Perth to Albany was completed and a number of small settlements sprang up along it to support pastoralists who had been granted grazing leases in the area from as early as 1854. Arthur River gradually developed into a thriving centre with a police barracks and gaol (1866), the Mount Pleasant Inn (1869), St Paul's Church (1885) still surviving to this day as remnants of the original settlement, and a post office, blacksmith, doctor and trading post also being built around that time. By the end of the century it was the major centre in the area.
The towns post office originally operated out of the inn. Mary Ann Spratt was appointed as the post mistress in 1866. The post office itself was not gazetted until 1892 which was the same year that the telegraph line was connected. The first telephone subscriber service commenced in 1913.
Today Arthur River mainly serves as a fuel stop for travellers, with some of the historic buildings open to tourists. Located in the town are the Arthur River Gull Roadhouse, which is now closed, and the Arthur River general store, which supplies basic grocery items, liquor, postal services, and meals, although it is not open 24hrs.
The Arthur Wool Shed Group, with shearing shed, shearers' quarters, sheep dip and concrete cricket pitch, is one of the most prominent buildings in the town. It was first established in 1910 and opened as a one-stop-shop for community shearers in the 1950s. It was extensively restored in the three years to 2002, at which point the complex was heritage listed by the Heritage Council of WA.
Another legacy of Arthur River’s pioneering farmers is Hillman Dam. Dug by hand and concreted to bring water from Hillman Rock, today it draws nature lovers to this spot to discover the reserve’s abundant flora and fauna