By the mid 1860s the local pastoralists were experimenting with sugar cane and cotton. In 1867, a tiny settlement was established as a supply and trading centre for the settlers in the area and to service the needs of miners trekking from Brisbane to the goldfields near Gympie. The local shire was constituted in 1879 and in 1888 the railway line from Brisbane was opened.
Timber was the principal industry of the area until the 1860s. The valuable red cedar, now very rare in the Shire, provided a good income for the timber getters. The massive logs were rafted down the Caboolture River to Deception Bay, from where they were taken by steamer to Brisbane. Settlers also made good use of the valuable timber, using it wherever possible for houses and barns.
The first crown land sold in the area was auctioned in 1864 for one pound Sterling an acre. Soon, the area had a thriving agricultural industry. The first major crop was sugar cane, then soon wheat, maize and Indian corn were being grown on the river flats. Vegetables were grown for local consumption. After an early unsuccessful foray with a wool industry, damp-susceptible sheep were abandoned in favour of more hardy cattle.
Settlement in Caboolture was accelerated with the discovery of gold at Gympie. In 1868, the town was used as a stop-over point by the Cobb and Co coach service connecting Brisbane, Gympie and Maryborough. This function continued with the rail link established in 1888.
Formerly a small dairy town, the location of Caboolture on the corridor between Brisbane and the Sunshine Coast resulted in an influx of residents in the 1970s and 1980s. The three main factors in this expansion were the electrification of the railway line to Brisbane, enabling travel to the Brisbane CBD in less than an hour, the development of the Bruce Highway to freeway (motorway) standard, and the availability of cheap land.
Common with many outer areas of Brisbane, the Caboolture Shire Council encouraged the development of low-cost housing areas that were affordable compared to established areas in Brisbane. This policy resulted in estates of small inexpensive houses on small blocks. At the same time, the Council allowed the subdivision of rural land into 'acreage' housing estates consisting of between 3/4-acre (3,035 m2) to 2-and-5-acre (8,100 and 20,000 m2) blocks.