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.

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