North Melbourne's first institutions were built in the 1840s, beginning with a cattle yard. At this time the suburb was not well defined and included Parkville and Royal Park as part of West Melbourne. In the 1850s a Benevolent Asylum was built between Abbotsford and Curzon Streets, coinciding with the desire to find space to accommodate the growing population from the gold rush. In 1859 the area was named Hotham borough, after the governor of Victoria and by 1861 had a population of over 7000.
The suburb was a predominately working class area with most of the males employed in local industry. In 1869 they decided to form the North Melbourne Football Club that later became a foundation member of the VFA (Australian rules football). On the 26 August 1887 the borough was renamed North Melbourne Town after the completion of the imposing North Melbourne Town Hall and the Metropolitan Meat Market.
During the 1890s tram routes had entered the area as far as Abbotsford Street, walking distance from the Arden Street Oval. In the 1930s many areas of North Melbourne, in particular the laneways, became overcrowded and defined as slums. As such, large government housing development projects were proposed, which were eventually completed in the 1960s.
Since North Melbourne is close to the city (less than 3 kilometres) the suburb slowly became gentrified by a younger demographic during the 1980s. However, it was not until the early 1990s that shopping strips such as Errol Street (where the North Melbourne Town Hall is located) became noticeably upmarket.
While three state schools existed in North Melbourne in 1900, only one, Errol Street Primary School, remains. However, there is still a large Catholic school presence in the area.