In 1854, graziers settled the area around the Black Dog Creek. However when John Conness discovered gold nearby in 1858, the settlement abruptly ceased in favour of the rush to find gold at the Chiltern Lead. The population grew along the lead (now Conness Street) and routes to the Beechworth and Indigo gold fields.
In February 1862 Chiltern was proclaimed a municipality and the first elected Council comprised all representatives from the miners' group, believed to be a precedent in Victoria. The Victorian Gazetteer of 1865 describes Chiltern:
“There are two steam sawmills and the district is agricultural and pastoral ... Gold mining – alluvial and quartz, is also carried on in and around the Borough, and alluvial claims being chiefly worked by machinery. Chiltern has a County and Police Court, a Court of Mines, a reading room, a telegraph station and a post and money order office; a newspaper (Federal Standard) ... and branches of the Australasia, New South Wales and Oriental Banks.”
Mining continued until the early 1900s, with quartz reef mining finally ceasing in 1911. The principal mines of the area included the Golden Bar Mine 10,200 ounces, the Magneta Mine 9,900 ounces, Golden Bar Extended 4,000 ounces and the Pass Poy party crushed 1,757 tons for 2,843 ounces. At its height, Chiltern had a population of about 20,000, including 2,000 Chinese.