The village was formerly a station on the Main Southern Railway. During the early 1860s, increased settlement occurred due to the rich soil that was derived from decomposing volcanic rock. The railway line was deviated in 1919 to a less steep alignment with easier grades and the original line became the Picton Loop Line. Colo Vale railway station, though disused, has been restored and is in good condition. The word Colo is believed to be an Aboriginal word for “a hill formed by volcanic rock”.
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