European explorers first visited George Town in 1798 when George Bass and Matthew Flinders discovered and partially explored northern Tasmania's Tamar River in their sloop, the Norfolk. However, northern Tasmania's first European settlement was not established until 1804 when Lt. Colonel Patterson was blown ashore there in the HMS Buffalo.

A permanent settlement was established in 1811 making it the third oldest settlement in Australia (after Sydney and Hobart) and is now regarded as Australia’s oldest “town”. George Town was named in honour of King George III.

The nearby Low Head lighthouse was constructed by Matthew Friend in 1805 who also devised and installed a semaphore system that was used to advise merchants in Launceston of shipping movements at the mouth of the Tamar River. The pilot station is still in use today.

The pilot station also houses a Maritime Museum which includes memorabilia salvaged from the many shipwrecks on the north coast of mainland Tasmania as well as some interesting, early diving equipment.

In an early 1825 diary entry by John Helder Wedge, surveyor, he stated “On first coming into sight of it (George Town) I was somewhat pleased at its appearance as it put me in mind of a neat English Village, the first time my eyes had feasted on such a sight since I left England. – Home sweet home, there is no place like home”.

However, in “The Savage Crows”, novelist Robert Drewe paints a rather grim picture of George Town in the 1830s. He describes it as “a dull, lifeless place, few people remaining there except those connected with the Government. There was a good wooden jetty and a gaol but no church. The only other major buildings were the lunatic asylum and the female factory, both swarming with inmates.” Drewe’s portrait is not entirely accurate as, between 1834-1840, it became the most important port on Van Diemen's Land's north coast, being particularly active in its trading with the new colony of Victoria.

It slumped in the 1840s only to be revitalised in the 1870s when gold was discovered at Lefroy, 15 kilometres east of the town. Lefroy, which is now little more than a ghost town, is well worth a visit. After the discovery of gold Lefroy became a thriving gold mining town with a population reaching 5000 around the turn of the century. Now there are only the ruins of a few buildings.

George Town was well known as the Tasmanian port for the now-defunct SeaCat fast passenger ferry from Port Welshpool in Victoria. Basslink, the 400 kV high voltage submarine cable connecting Tasmania to the national electricity market, terminates in George Town.

The municipal area had a population of 6,728 in the 2001 census.