Yallambie consists of a large army barracks and residential areas 16 km north-east of central Melbourne. It is part of the Macleod post code area and the barracks are known as Watsonia, a suburb to the north.

The name is derived from an Aboriginal word nglambi, meaning to rest or to remain. It was given to a farm of 245 hectares, consolidated in 1842 by John and Robert Bakewell from an unsuccessful subdivision. They called the farm Yallambie Park, and the name was kept when it was sold to Thomas Wragge in 1872. Wragge was a successful pastoralist, an active local shire councillor and built a house at 8-14 Tarcoola Drive which still stands.

In 1943 the Commonwealth Government purchased 100 ha for an army camp, holding up to 4500 personnel during World War II. Its size was doubled in 1951, and it was officially opened in 1960 as the Watsonia Army Barracks with extensive buildings and facilities. During the 1980s it accommodated a sensitive signals installation, and in 1986 it was named the Simpson Army Barracks after Major General C.H. Simpson, Chief Signals Officer in World War II. It has an Army Signals Museum (1975). In 1993 land was sold from the southern boundary for the residential Streeton Views estate.

The residential areas are relatively remote from railway stations and, except for Streeton Views, were developed in the 1970s and early 1980s. The primary school was opened in 1971, positioned to take pupils from neighbouring Watsonia to the north. The Macleod primary school opposite the Barracks closed in 1996. Pupils from the south of Yallambie are closer to the Viewbank school. Yallambie has a kindergarten in the east, along with tennis courts and a linear reserve beside the Plenty River. Its census populations have been:

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