Lima, a rural district, comprises the physical features of Lima Creek, Lima Valley and the smaller localities of Lima East and Lima South. The area is generally 25 km south of Benalla, set in undulating country with numerous creeks. There is State forest to the west and south, part of which is the Warrenbayne State forest.
Lima was the name of a pastoral run taken up in 1839 by William Black and William McKellar. McKellar had apparently visited Lima, Peru.
By 1880 small-farm settlers had come to Lima and schools were opened at Lima (1883), Lima South (1885) and Lima East (1888). A Lima station was on the branch railway line from Benalla to Tatong (1914-47). The locality itself, however, was on neither a main road nor a railway line, and the nearest main-road town is Swanpool on the Midland Highway between Benalla and Mansfield.
Lima was developed as a dairying district, and local farmers assisted in the agitation for the Lake Nillahcootie storage near the headwaters of the Broken River. Dairying and mixed farming are now carried on. All three Lima schools were closed in 1970-71. Lima South has a public hall and a Country Fire Authority station.
Lima's census populations, probably for the three localities, were: