Joseph Stevenson was the first European to settle in the area now known as Christmas Hills. He arrived in 1842 and occupied a pastoral lease.The area is named after Stevensons shepherd, David Christmas.  Mick Woiwod defines the area of Christmas Hills as being the same as the 15 square mile Parish of Sutton which is bounded on the east by the Parish of Burgoyne. Skyline Road is the boundary line between the two parishes.  Christmas Hills has no township and therefore many of its residents use the services and facilities available in Yarra Glen. The stringybark forests did not attract many farming people but the success of the Caledonian Gold Fields encouraged gold miners to fossick the Christmas Hills in the 1850s. Changes to legislation encouraged small scale selection of land in the 1860s and those who took up the challenge found it was a difficult terrain for farming. Some supplemented their income by mining, others provided services to the steady stream of diggers passing through to Woods Point. Hotels and grog shanties were established. The school was built in 1874 and a post office was set up at this time in Thomas Youngs General Store. By the turn of the century this industry declined as travellers followed a new route through Lilydale to Healesville. In the early 1900s the area was a popular holiday destination and guest houses flourished. By the mid-1900s the hills supported small mining operations, a slate quarry, scattered farms and weekenders. The Victorian Government bought out many of these properties in the 1970s to use the land for the Sugarloaf Reservoir.