The town of Lismore resides in the Aboriginal Bundjalung Nation area. Evidence suggests aboriginal people arrived from the north of Australia around 8,000 years ago, however, the actual area of the Bundjalung people from Evans Head is currently under examination, as well as the actual origin of the name Bundjalung. It has been suggested that the Aboriginal people called the area Tuckurimbah meaning "glutton."
European History of Lismore begins in around 1843. A pastoral run covering an area of 93 km² was taken up by Captain Dumaresq at this time covering the Lismore area. The run was stocked with sheep from the New England area. Ward Stephens took up the run in the same year, but the subtropical climate was unsuited for sheep grazing, so the run was eventually abandoned. In 1845, William and Jane Wilson took over the run. The Wilsons were Scottish, and they arrived in New South Wales in 1833. One hypothesis is that Jane Wilson was responsible for naming the location for Lismore, Scotland, where the couple had honeymooned. Another theory is that it was named after Lismore, Ireland because of the similarity in scenery.
In 1855, the surveyor Frederick Peppercorne was instructed by Sir Thomas Mitchell to determine a site for a township in the area. Peppercorne submitted his map of the proposed village reserve in February 1856. The chosen site was William Wilson's homestead paddock, and the area was proclaimed the "Town of Lismore" in the NSW Government Gazette in May 1856. Lismore was incorporated as a municipality on in 1879, and was proclaimed a so-called "city" in 1946.