Stanley was first surveyed in 1842 and named after Edward Stanley, the 14th Earl of Derby, who served in the Colonial Office and, interestingly, was largely responsible for the introduction of the probation system for convict administration. Lord Stanley later went on to be Prime Minister of England for three terms.

The town was designed by Irish architect and engineer John Archer who is buried there.

Established primarily as a fishing village, it was also the one time headquarters of the Van Diemen's Land Company that was granted land in north-western Van Diemen's Land, including the Stanley area. Employees of the company moving from England settled in the area in October 1826.

Stanley was also the birthplace of Australian Prime Minister, Joseph Lyons, the only Tasmanian ever to become Prime Minister. Lyons Cottage where he was born is located in Church Street. The cottage is simple and unpretentious. The Lyons family moved to Stanley from Ulverstone in the mid-1880s. The Cottage is open to the public and contains a number of interesting items of memorabilia.

A port opened in 1827 and the first school opened in 1841. The Post Office opened on 1st July 1845 but was known as Circular Head until 1882. In 1880 the stage first coach service between Stanley and Burnie was established and the journey by coach took about 7 hours.

In 1911 the first railway link was completed between Stanley and Trowutta and in 1936 a submarine telegraph and telephone cable from Apollo Bay to Stanley provided the first connection to Tasmania from mainland Australia.

Today Stanley is a tourist destination and the main fishing port on the north-west coast of Tasmania. The most distinctive landmark in Stanley is The Nut, an old volcanic plug discovered by the explorers Bass and Flinders in 1798, who officially named it Circular Head. It has steep sides and rises to 143 metres with a flat top. It is possible to walk to the top of The Nut via a steep track or use the chair lift which goes to the summit.

Tourists regularly travel to Highfield, an elegant 1830s homestead including chapel, cottages and farm yard buildings, which was built for the head of the Van Diemen’s Land Company, to view the picturesque northern beaches with The Nut in the background.

The port on the southern side of The Nut is where Stanley's fishing fleets tie up near the old wharf, which was designed in colonial times to fend off the fierce seas which batter the cape.

Although always a fishing town, crayfish and shark have replaced whales as the major catch.

St James Presbyterian Church in Stanley is an early example of a prefabricated building imported from England. A meeting to discuss the creation of a Presbyterian Church was held on 9th November 1853. It was agreed to buy the church from the 'old country' and consequently the church was purchased for one hundred and forty-five pounds.

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