The port was named by Captain Cook when he passed on 11 May 1770, honouring Sir Philip Stephens, who was Secretary to the Admiralty. Stephens was a personal friend of Cook and had recommended him for command of the voyage. It seems Cook's initial choice had actually been Point Keppel and Keppel Bay, but instead he used Keppel Bay later.
The site of Port Macquarie was first visited by Europeans in 1818 when John Oxley reached the Pacific Ocean from the interior, after his journey to explore inland New South Wales. He named the location after the Governor of New South Wales, Lachlan Macquarie.
In 1821, Port Macquarie was founded as a penal settlement, replacing Newcastle as the destination for convicts who had committed secondary crimes in New South Wales.
In 1799 Matthew Flinders landed on the present southern headland at Yamba. He had been despatched from Sydney to find a new Eden, but from his vantage point atop a craggy promontory, now Pilot Head, he dismissed the turbulent estuary as dangerous and unworthy of further examination, before sailing away.