Pre white settlement of Victoria, the Mullum Mullum Creek would certainly have been occupied by aborigines of the Wurundjeri tribe. Until recently there has been no direct evidence in the area of Yarran Dheran, but during the construction of the new Deep Creek Road bridge over the Mullum Mullum Creek in 2001 a greenstone aboriginal axehead was found . There is now a designated aboriginal site between 2 piers of the bridge.

One of the earliest white settlers in the area was August Schwerkolt, who built the still existing Schwerkolt Cottage to the east of Yarran Dheran in 1863. The Cottage was built of local stone, quarried from small quarries along the Mullum Mullum Creek. About this time, a larger quarry began to operate in what is now the eastern part of Yarran Dheran, although this was probably not the quarry used by Schwerkolt. The quarry seems to have begun operations in 1934 and may have been used until about 1955. The old quarry site was used as a municipal land fill from 1955 Its use for this purpose continued until approximately1963.

In 1969 the City of Nunawading asked the Blackburn and District Tree Preservation Society to look for a site within the municipality which could be used as a botanic garden for Australian plants, similar to the Maranoa Gardens in Balwyn. The Society chose the old tip site and adjacent land and recommended that the name of the reserve be Yarran Dheran, the aboriginal words for Wattle Valley, the name of the adjacent road. The Council accepted these recommendations.

Council appointed a Management Committee consisting of Tree Society members and local residents and appointed a landscape architect, Paul Thomson, to carry out design work for the development of the project. The project was inaugurated by a ceremony and planting of a small group of wattles on 26th September 1971. The site of this planting is uncertain, but is possibly where the car park is now situated. The Information Centre was built in 1979/80 and officially opened on 3rd August 1980.

Although originally intended to be a botanic garden, Yarran Dheran has turned out to be much more a bush reserve, with a strong basis of plants indigenous to the local area. Although non-indigenous native plants were planted in the early days of the project, many of them belong not too far away and the 'feel' of the area is not too different from that of the local remnant bush areas.