During the 1840s squatters moving south into Gippsland used the area as a transit camp. Gold was discovered at Livingstone Creek in 1851. Omeo grew as a gold mining service town with a population of around 9,000 during the late 1850's early 1860's. Locals built the log gaol in 1863 in an effort to keep some form of law and order. Isolation and the mountainous terrain ensured that development and population growth remained slow. The gold rush reached its peak in the 1860s. Land settlement began in 1870 and Omeo was declared a municipality in 1872. However, the stock of alluvial gold began to disappear and with it went many of the miners. Chinese people moved into the area to work the tailings and established market gardens. A new boom began when reef gold was located at Sunnyside, Dry Gully, Glen Wills and Cassilis. Heavy machinery to work the reefs was hauled over the mountains by bullock teams and hydraulic dredges were in operation in the 1880s. However, this supply too was soon exhausted and the fields were abandoned by the start of the First World War. Cattle and sheep came to the fore with the end of the gold days.