In 1788, Captain Arthur Phillip, the inaugural governor of New South Wales, named the cove where he established the first British settlement "Sydney Cove" in honor of Home Secretary Thomas Townshend, 1st Viscount Sydney. Prior to this, the cove was known to the Indigenous people as Warrane. Although Phillip contemplated naming the settlement "Albion," this name was never formally adopted. By 1790, the township was commonly referred to as Sydney by Phillip and other officials.

The land on which this historic settlement was founded is the traditional territory of the Gadigal (or Cadigal) clan, who have lived along the southern shores of Port Jackson, from South Head to Darling Harbour. They refer to their land as Gadi (Cadi). The naming conventions of Aboriginal clans in the Sydney region often incorporate the suffix "-gal," linking names to specific territories, locations, food sources, or totems. Today, Greater Sydney encompasses the traditional lands of 28 known Aboriginal clans, highlighting the rich Indigenous heritage that predates European settlement.