Oxley derives its name from the Oxley Plains, which were named in 1824 by the explorers Hume and Hovell after John Oxley, the Surveyor-General of New South Wales. Oxley Post Office opened on 1 January 1870. An earlier office named Oxley became Milawa.[2]
The township served as the administrative centre of the Shire of Oxley until 1936.