The town is located 8 kilometres from the coast on the banks of the Margaret River and although it was founded as part of the Government Group Settlement Scheme to attract migrants to country areas in the 1920s, the first settlers only arrived in the area around 1851. In 1922, one hundred new settlers arrived to establish farms in the timber country, marking the start of the dairy industry in the South West. Beef and sheep farming, cottage industries, fishing and tourism were the mainstays of Margaret River's economy but these are being overtaken by the wine producing industry which is fast becoming the major attraction of the region. Vineyards and wineries are open to the public for tastings and sales.
Information is available from the tourist bureau.
Margaret River is a base for exploring some of the caves which have formed over eons along the coast. Visitors are advised against attempting to explore unmarked caves. Margaret River has a growing reputation for its superb surfing conditions. Australian and international surf championships have been held here and the 'Margaret River Masters' has become an annual event.