In 1792 Admiral Bruny D'Entrecasteaux, commander of an expedition charting the coast while searching for the missing explorer La Perouse, named ' L'Esperance' bay after one of his expeditions two ships which sheltered in the bay during a storm.

The coast had previously been explored as early as 1627 when the Dutch navigator Pieter Nuyts aboard the 'Gulde Zeepaard' was in the area. Numerous explorers, and probably whalers, were in the area in the intervening years.

British explorer Matthew Flinders reached the area by sea in January 1802.

Whalers and sealers operated from the Esperance area during the 1820s and 1830s.

The first overland exploration of the district occurred in 1841 when Edward Eyre, and his Aboriginal guide, Wylie, arrived after crossing the Great Australian Bight.

Surveyor John Septimus Roe reported unfavourably on the area when he surveyed it in 1848.

The first settlers in the Esperance area were the Dempster brothers who took up the large Esperance Bay Pastoral Station lease in 1863-64. The former Dempster homestead was constructed during the 1860s using local limestone and timber with a corrugated iron roof. This was the first building in Esperance. It is now privately owned and is on the register of the National Estate.

In 1870 John Forrest travelled through Esperance on his way to Port Augusta.

The overland telegraph opened in 1876 and Esperance was the site of one of five telegraph stations erected on the southern coast. Forrest's Aboriginal companion on his 1869, 1870 and 1874 expeditions, Tommy Windich (Windiitj), died at Esperance in 1976 while working as a guide for the construction of the overland telegraph. John Forrest erected an engraved black slate headstone on his grave, which remains in town today.

The Esperance townsite was surveyed in 1881 but it wasn't until the Western Australian gold rushes of the 1890s that it experienced substantial growth. Esperance became a port for the Coolgardie goldfields in 1893 and was declared a municipality in 1895.

The port at Esperance lost importance when the railway between Perth and Kalgoorlie opened in 1896 and miners instead travelled to the goldfields from the west.

The development of surrounding farming district proved difficult with the major problem being the poor quality of the soil. In 1949 the Esperance Downs Research Station was established and made the discovery that the addition of trace elements to the soil would improve its fertility. The previously unproductive sand plains were subsequently converted into an important agricultural district.

Esperance, around 720 kilometres from Perth by road, is today a service centre and port for the surrounding farmland.