The townsite was one of the original sidings on the Great Southern Railway line. With its good rainfall and mild temperatures, Tenterden made for perfect sheep country. The area was originally settled in the 1860s when pastoralists started grazing sheep in the area.
The town was originally named Round Swamp, however that was changed when the town was officially gazetted in 1893.
A local attraction is the very scenic Lake Nunijup, which is an ephemeral salt lake and the reserve covers a wide area of 76 hectares.