In 1827, Thomas Pye, son of Third Fleet Convict John Pye, secured a land grant near the junction of the Campbell and Gilmandyke Rivers. The area was named by the local aboriginals as bunnamagoo – translated as 'The Meeting of Waters'. Thomas Pye registered the property with the same name and with the help of convict labourers, he crafted a stone Georgian-style homestead from locally quarried soapstone.

The historic Bunnamagoo Homestead was one of the first pastoral homesteads built west of the Great Dividing Range. Bunnamagoo is the local indigenous name for ‘the meeting of waters,’ owing to the two adjoining rivers on the property. A vineyard was planted to Chardonnay and Pinot Noir in the 1990s and gained much notoriety for high-quality wine grapes.

Over the years as the property passed from owner to owner it was subjected to a number of unsympathetic alterations. By the time Bunnamagoo was acquired by the Paspaley family in 1992, the original soapstone house had fallen badly into decay.