Governor Arthur Phillip landed on the island on 7 March1788 during his exploration of the Hawkesbury River. Members of the expedition caught a quantity of fish and consequently the island was named Mullet. A band of natives approached the party the following morning and First Lieutenant William Bradley recorded the event in his journal with an observation of the intricate body markings in pipe clay and red ochre on their skin. The beach is still named Bradley where this meeting took place.

Andrew Thompson, Chief Constable of Windsor, commissioned the construction of a boat in1802 and established a salt manufacturing plant on the island by building shallow ponds, filling them from the Hawkesbury River and allowing the sun to evaporate the water. The island was purchased by Henry Dangar in 1864 and he built a large house with a castellated stone water-tower which may still be seen a short distance from the general store. Dangar died in 1917 and subdivision of his estate has resulted in a settlement where no vehicles are permitted. Measuring half by three quarters of a kilometre, this island offers a pleasant relaxing walking experience and is only a kilometre by boat from Brooklyn township.

The Union Bridge Company which built the railway bridge across the Hawkesbury used the island to assemble the steel spans, some of which weighed up to 1000 tonnes. These spans were floated into position and made a dramatic scene.

A military post was established on the island following the Japanese submarine attack on Sydney Harbour on 31 May 1942 when captured maps revealed the railway bridge as a target. Fortifications were built to protect approaches to the bridge with gun emplacements on Long Island to the west of Dangar Island.