The Australian Terrier is descended from the rough coated type terriers brought from Great Britain to Australia in the early 19th century. The ancestral types of all of these breeds were kept to eradicate mice and rats. The Australian Terrier shares ancestors with the Cairn Terrier, Shorthaired Skye Terrier, and the Dandie Dinmont Terrier; Yorkshire Terriers and Irish Terriers were also crossed into the dog during the breed's development.
Development of the breed began in Australia about 1820, and the dogs were at first called the Rough Coated Terrier. The breed was officially recognised in 1850, and later renamed as the Australian Terrier in 1892. The Australian Terrier was shown at a dog show for the first time in 1906 in Melbourne, and was also shown in Great Britain about the same time. The Kennel Club (UK) recognised the breed in 1933. The American Kennel Club recognised the Australian Terrier in 1960, and the United Kennel Club (US) in 1970. It is now recognised by all of the kennel clubs in the English speaking world, and also is listed by various minor kennel clubs and other clubs and registries.