Tasmania was inhabited 20,000 years ago by primitive peoples (later called Tasmanians) believed to have migrated from mainland Australia. (Their descendants became extinct in the 19th century.) In 1642 Abel Janszoon Tasman, a Dutch navigator, sighted the island. He named it Van Diemen's Land after the governor of the Dutch East Indies.

During the next 150 years, Van Diemen's Land was explored by the British and the French. Extensive whaling and sealing operations were carried on in its waters. In 1803 it became a British settlement and penal colony. The island was a dependency of New South Wales until 1825, when it was made a separate colony. The last shipment of convicts to Tasmania took place in 1853. In 1856 representative government was established, and the present name of the island was officially adopted.

On January 1, 1901, Tasmania was federated with other Australian states into the Commonwealth of Australia. The island remained largely agricultural and pastoral well into the 20th century. An extensive hydroelectric development program to spur industrialization was begun in the 1930's, but was interrupted by World War II. Resumed after the war, it greatly increased Tasmania's industrial capacity. However, it also was met with criticism and protests from environmental groups, which ultimately brought about a national conservation movement.

Tasmania's economy tapered in late 20th and early 21st centuries. However, in recent years major industrial projects were being implemented near the city of Victoria in an effort to spur economic growth.