Italian Gully is a rural locality and former mining village south of Scarsdale and 25 km south-west of Ballarat. Gold was discovered there in 1855, reputedly by a party of Italians. Modern maps show Italian Gully as a place on the road from Scarsdale to Cape Clear, but the actual gully/creek runs several kilometres eastwards.
Bailliere’s Victorian gazetteer (1865) described Italian Gully as a postal mining village with ‘alluvial digging for miles around’. An Anglican school was opened in 1860 and continued until 1874. Its closure corresponded with the decline in mining, and the opening of a school in 1904 in a Methodist church corresponded with the revival of mining in the Cape Clear area. From a population of 505 in 1911, Italian Gully was left with 65 in the 1921 census. The school closed in 1934.
Italian Gully is in hilly, partly cleared country with forest to the east.