The Otago settlement, of which Dunedin was the centre, had its genesis in the general framework of Edward Gibbon Wakefield's theory of systematic colonisation. In Scotland, in the early 1840s, a trade depression and widespread poverty among the working classes, followed by the disruption of the Established Church of Scotland, prompted leading members of the new Free Church of Scotland, notably the Rev. Thomas Burns and Captain William Cargill, to plan a Church settlement somewhere in the South Island of New Zealand. Frederick Tuckett chose Otago as the most suitable site and, in November 1847, the emigrant ships John Wickliffe and Philip Laing set sail for Otago Harbour, the former arriving there first on 23 March 1848. This date is now observed as the anniversary day of the province. The plan for Dunedin was drawn up by the surveyor, Charles Kettle, and the place names of the main streets and suburbs commemorate the close association between the “New” and the “Old” Edinburgh.

The New Edinburgh settlement, the name of which was changed to Dunedin (the Gaelic form of Edinburgh), was from the outset strongly Free Church in character. With the discovery of gold at Tuapeka by Gabriel Read in 1861, Dunedin rapidly grew into a flourishing commercial centre, and it seemed for a time as if the Scottish settlers (the “Old Identities”) would be submerged by the tide of gold seekers (the “New Iniquity”) which poured into the province. But the Scottish influence survived the challenge and Dunedin today has retained many characteristics associated with its origin.

Under the Otago Municipal Corporation Ordinance of 1865 the town of Dunedin was constituted a city on 18 May of that year. As has been the case in other centres, many adjoining boroughs and districts have amalgamated with the city. These include Caversham (1904), South Dunedin (1908), North-East Valley (1910), Roslyn (1912), Mornington, Maori Hill, and Andersons Bay (Bay Town) (1916), and Tainui and Sunshine districts (1916). At the present time the main components of the urban area are: Dunedin city proper and the boroughs of Port Chalmers, West Harbour, St. Kilda, Green Island, and Mosgiel. Components within the adjoining Taieri and Peninsula Counties are: Fairfield, Wingatui, and Brighton—all in Taieri county; and Broad Bay, Macandrew Bay, and Ocean Grove—in Peninsula County.