Apollo Bay, along the Great Ocean Road, about 3 hours out of Melbourne, is situated on the eastern side of Cape Otway, along the edge of the Barham River. With a population of only around 1800, it is smaller and quieter than other tourist destinations such as Lorne.

In the 1840s the Henty brothers established a whaling station at Point Bunbury on the western end of the bay. The bay was named by a Captain Loutit in 1845 when he sheltered his vessel, the Apollo, here from a storm.

The first settlers were timber cutters in the 1850s who subsequently established sawmills. Farmers later moved into the area. During this period almost all access to the area was by sea. The township was established in 1877 (originally called Krambruk), and a school was open by 1880. With the upgrade of the road to the town in 1927 and the completion of the Great Ocean Road in 1932, the town became an important fishing port.

In 1936 a submarine telegraph and telephone cable from Apollo Bay to Stanley in Tasmania, providing the first connection to Tasmania. The Apollo Bay Telegraph station closed in 1963 and is now a museum.

In 1932 the coastal steamer Casino sank while attempting to berth at the town jetty. Ten lives were lost.

Every Saturday (weather permitting), market stalls are set up between the Information Centre & the Surf Lifesaving Club. It is host to the annual Apollo Bay Music Festival (April) and the Great Ocean Sports Festival (February). It has a Surf Lifesaving Club and Sailing Club.