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Divided from Sydney by a large swamp, settlement in Randwick was hampered by few easily accessible transport routes into the area and with little industry in the area to lure settlers. Situated on elevated coastal land, Randwick attracted rich merchants and successful businessmen who wanted the seclusion that the remote suburb was able to offer and found Randwick to be a stark contrast to the shacks and poverty of the tannery and glue factory workers who lived on the land below.

One of the first land-owners in the area was Mayor Simeon Pearce and his brother James. The brothers developed market gardens and went about building their family's grand mansions on their properties. Their love for the area had them decide to try and attract similar Sydney elite to the area which they hoped to model on the pretty English village of Randwick, and by the end of the 1800s the town's landscape was distinguished by its grand homes and list of well-to-do residents.

In 1852 Pearce built an asylum for destitute children on a portion of this land with the vision to re-educate and socialise them, producing useful members of society. With the end of the First World War in 1915, the asylum would be closed and used instead as a hospital and recuperation centre for the wounded returned soldiers and is today the site of Randwick Children's Hospital. The end of the war would also spell the end of Randwick's golden age. Sydneysiders had begun a new love affair with the sea, diverting many of the social elite to homes in the nearby coastal settlement of Coogee.

By the early 1900s Randwick was destined to be the residential heartland of the area but no longer the jewel in the crown. In an era of great social unhappiness following the Great Depression of 1929, Randwick's Royal Racecourse on which races had been held as an elite folly since the 1830s fell into favour with the greater Sydney population, with crowds of thousands turning out to watch the races, and the racecourse remains a favourite attraction for Sydneysiders today.

With its stately 1920s homes and Centennial Park in its northern corner, today Randwick is a suburb at the heart of one of the most prestigious residential precincts of Sydney, with a highly educated population and key educational and health institutions within its borders.