Named in honour of the Bussell's, an early and notable family of pioneers who were the first settlers in the area. They had previously settled at Augusta near the mouth of the Blackwood River in 1830, and in 1831, disenchanted with the hardships encountered, J. G. Bussell discovered land of "parkland" nature in the Vasse region. He was granted land in the area in 1832, and moved here in 1834. Bussell built a home named "Cattlechosen", and the remainder of his family moved here from Augusta in 1835/6.

The first official mention of the name Busselton was on 30 June 1835, when the Colonial Secretary wrote informing the Surveyor General that nine towns, among which was Busselton, were to be considered open for the purchase of allotments. On 4 July 1835 a General Notice to that effect was issued from the Surveyor General's office, Perth. The district continued to be referred to as "the Vasse", and in general "the Vasse" and "Busselton" were equally used as late as the turn of the century, when "the Vasse" began to be dropped.