Prior to European settlement, the Khancoban area was inhabited by the Jaitmathang, Djilamatang and Walgalu people.  In 1824, Hume and Hovell were the first Europeans to pass through the district and graziers soon followed, impressed by the abundance of fodder and water. The first cattle run in the area was settled in about 1838 in what was known as Swampy Plains. Later, this run became known as “Khancoban Station”.

Khancoban lies in the heart of the high country, home of Australia’s mountain cattlemen. This heritage is celebrated in Banjo Paterson’s epic poem, “The Man from Snowy River”. Paterson was a frequent visitor to the area, and it is said that on one of his visits, he met Jack Riley, a stockman from nearby Tom Groggin Station. As they talked, Riley recounted his hair-raising ride down the Leatherbarrel Mountain in pursuit of a runaway colt. His story provided the inspiration for the poem that created the Man from Snowy River legend. Tom Groggin Station is about 50 km out of Khancoban, on the Alpine way. Although the station itself is private property, there is a picturesque camping and picnic area beside the Murray River where you may come across some inquisitive emus and kangaroos.

As illustrated in The Man from Snowy River, brumby running was an activity that required enormous skill and courage, and involved lassoing a wild horse in the mountains at a full gallop. The first brumbies in the Snowy Mountains were escapees from the early settlers, as well as other domestic horses that were turned loose in the mountains for various reasons. Today, there are around 7000 brumbies living in Australia’s high country, and you may come across them in your travels around Khancoban.

Khancoban continued as a sleepy hamlet until construction of the Snowy Mountains Hydro Electric Scheme began in 1949. Like Cabramurra, Khancoban was built by the Snowy Mountains Hydro-Electric Authority as a town to house workers on the Snowy Mountains Hydro-Electric Scheme and their families. During this time, the population reached its peak of around 2,000 people. Today, the town has a population of around 280. It is the headquarters of the Murray region of the scheme, which is owned and operated by Snowy Hydro Limited, overseeing the nearby Murray 1 and 2 power stations and Khancoban Pondage. 

The Alpine Way was constructed to give access to the scheme's engineering features, and was not completely sealed until the 1990s, which immediately gave Khancoban quicker access to Thredbo, Jindabyne, Cooma and Canberra and has since provided travellers with a scenic connection from NSW through to Victoria.