The town is located on the northern coast of the island, at a locality previously known as Mussel Rocks. The island had been leased as a pastoral run but in 1868 a large part was subdivided for closer settlement. The township was surveyed at this time. It was named by Cox, the Government Surveyor, after the port on the Isle of Wight.
Two hotels were soon constructed, the Isle of Wight and Wood's Family Hotel. A jetty was built in 1870 and a ferry service operated from Stony Point on the Mornington Peninsula, the western side of Westernport Bay. Many visitors came to Cowes, attracted by the moderate climate and the opportunity for sea bathing, fishing and shooting. Game animals had earlier been released by the Acclimatization Society.
The township quickly developed, as shown by the description in The New Tourists' Guide for 1888-9.
By the 1920s, many large homes were operating as guesthouses. Both hotels were destroyed by fire during this period. The Isle of Wight, burnt in 1925, was rebuilt. Wood's was burnt down in 1920 and was replaced by a new building named Phillip Island Hotel. This also burnt down in the early 1960s. The Victorian Municipal Directory described the resort in 1938.
By the 1950s, the guesthouse trade was in decline. The construction of a bridge to the mainland in 1940 made the island more accessible to the increasing number of car owners. Holiday houses were built on many housing estates developed over the next thirty years. Now numerous motels, flats and caravan parks also cater to the many tourists. The town is also popular as a place of retirement. By 1994 the Victorian Municipal Directory described a substantial town, which although dependent on tourism, has many services and a large resident population.
Cutter, J. "Guesthouses on Phillip Island: a history". 1987.
Gliddon, J.W. "Phillip Island: in picture and story". Rev. ed. 1977.
White, J. "One hundred years of history". 1974.
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