George Russell, manager of the pastoral Clyde Company, opened up the area to European settlement in 1836. In 1837, a Frenchman named Jean Duverney crossed the Woady Yaloak River, claimed land on both banks, and named the area "Frenchman's Run". Duverney called the small, developing village Cressy, after Crécy in France, where he was born.
Cressy Post Office opened on 1 January 1858.
After the outbreak of World War II, an airfield was constructed south of the town towards Colac, and was used by the RAAF until 1946 as a combat training base and for bombing practice. Cressy airfield had three airstrips, two about 300 metres long with a drained gravel surface and a grass airstrip about 400 metres long.
Two large Bellman hangars were used for aircraft maintenance. The local history group at the church has some photos and information on the airmen and the planes involved.
Several RAAF aircraft crashed in the vicinity during the war.
The tranquil local cemetery, surrounded by old trees, is still in use.
The first railway to reach Cressy was an extension of the line from Colac to Beeac. This opened in December 1910, and by September 1911, the line had been extended north to Newtown, where it joined the line to Ballarat. In September 1910 work began at Cressy on the Western Plains Railway.
This line ran joined the line to Ararat at Maroona, and the lines to Geelong at Gheringhap. Cressy, being at the junction of these lines, became an important railway centre, with extensive buildings, railway yards and a turntable.
Buildings included station offices, refreshment rooms and an elevated signal box. The line from Colac to Newtown was closed in 1953. Very few traces of Cressy station now remain.