The current-day Colebrook district was originally named Jerusalem Plains.

Europeans first investigated the district in 1804 and settlers took up a number of expansive land grants in the area in 1823.

The name Colebrook Dale had been taken up by 1834, but the two names persisted in common usage for numerous years.

Convicts were introduced to the area in 1834. Jerusalem was used as a convict probation station, and the convicts stationed at the site constructed a sandstone courthouse and gaol, which is still standing today as a private residence. Other convicts were engaged as labourers in coalmines and quarries. The convict station was vacated in 1848.

The small St Patrick’s Catholic Church was built in Gothic Revival-style in 1856-57. The sandstone, Victorian Free Gothic-style St James’ Anglican Church was constructed in 1885.

The town of Jerusalem was renamed Colebrook in 1894.

Colebrook is today a rural township situated in a deep valley near the Coal River, 54 kilometres from Hobart. It contains a number of buildings listed on the register of the National Estate including the single storey, Victorian-style, stone former police station building and the single storey, stucco Waterdale cottage.