The Otway region was home to the Katubanuut people before European settlement.

The name Otway was chosen by Lieut. Grant after his friend Royal Naval Captain William Albany Ottway. It was first given to Cape Otway (which he called Cape Albany Ottway), in Bass Strait.

Among the earliest buildings were a 60 ft lighthouse tower (1846-8), headkeepers' and assistants' quarters (1857-8) and storerooms (1848-57), and a detached former telegraph station (1859).

Pastoralism, cropping, dairying, timber getting, railway servicing and commercial activities contributed to the development of the diverse area which is now the Colac Otway Shire.

The Shire of Otway was created on 6 May 1919, the result of a meeting apparently conducted in the Ditchley Park Hotel, Lavers Hill, to hear complaints from residents who believed they were being poorly represented by the Colac Council. The new Shire of Otway covered a large coastal area east of Melbourne, including Cape Otway and Apollo Bay. The confluence of the Aire, Calder and Ford rivers provided the largest alluvial basin in the Otway Shire Council area.

The Great Ocean Road was constructed through the Shire of Otway during the Depression, providing employment for returned World War I soldiers. It opened in 1932.

In 1985 the Otway Shire Council issued a medal to commemorate Victoria's sesquicentennary.  In the same year the medal was issued the Council suggested damming the Aire River for water supply. The 'Save the Otways' campaign fought against the proposal, and the project did not go ahead.

On 23 September 1994 the Shire of Otway, City and Shire of Colac and part of the Shire of Heytesbury were united by order of the Governor in Council to form the Colac-Otway Shire Council.

References:
Blake, L. (1977). Place Names of Victoria.
Municipal Association of Victoria website http://www.mav.asn.au/
Lavers Hill Community website http://www.lavershillanddistrict.org/community.htm
Colac-Otway Shire Council website http://www.colacotway.vic.gov.au/Page/Page.asp?Page_Id=137&h=1
National Trust (Vic) website http://www.nattrust.com.au

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