Diggers Rest began life as a stopping place on the road to the Bendigo goldfields and the Post Office opened on 18 June 1860. Caroline Chisholm started a women's shelter in the area. The town grew in the 1870s and 1880s and became a postal village with a general store, post office, weighbridge, mechanics' institute and a chaff mill. The Diggers Rest Hotel was built by 1854, and later enlarged, and became an important stopping place on the route to the goldfields. It was severely damaged by fire in 2012. Ruins Diggers Rest is sometimes erroneously referred to as being famous for being the location of the first controlled powered flight of an aeroplane undertaken in Australia. The flight was performed by Harry Houdini in 1910. This was however preceded by 2 other flights. The only cafe in town is named in his honour. To the north of Diggers Rest township within the locality is the former township known as Aitken's Gap, The Gap or Buttlejorrk.
The four Sunbury Pop Festivals were held on the same 620-acre private farm along Jacksons Creek, on the southern outskirts of Sunbury, between Sunbury and Diggers Rest. The property was owned by farmer and local identity George Duncan, and the property has become known in the district over the years simply as "Duncan's farm". The entrance gates to the Sunbury Pop Festivals was off Watsons Road. Also because of its close proximity to the smaller township of Diggers Rest, many of the attendees who traveled to Sunbury by train, actually alighted at Diggers Rest Railway station, and not Sunbury.
Present day
Diggers Rest contains a general store, a and a CFAfire station, along with three large recreation reserves. Sporting groups in Diggers Rest include Diggers Rest Football Club who play in the Riddell District Football League. Diggers Rest Primary School was first opened in 1882 and moved to its present site in 1990. Diggers Rest Primary School features excellent facilities including air conditioned and heated classrooms, computer and Internet access to all grades, modern sports and playground equipment and landscaped grounds. Diggers Rest Primary School is an integral part of the wider community and hosts annual events such as the Community Carols, Billy Cart Derby and Grandparents’ Day. Other facilities in the Diggers Rest area include the Holden Flora and Fauna Reserve, Animal LandChildren's Farm and SPSK Jadran, a Slovenian social club which services nearby St Albans and Keilor. Diggers Rest also has a Scout Group containing Cub Scouts and Scouts. They meet at the Diggers Rest Reserve behind the tennis club rooms.
