The first known settlement of Picnic Bay was by Harry Butler and his family who established a small dairy, orchard and mixed farm in Picnic Bay in 1877 when Magnetic Island was declared a quarantine station. The family experimented in the cultivation of pineapples in the bay and as part of a tourism venture built a guest house establishing an intermittent ferry service from Townsville. The Butler family cared for the sick who were quarantined on the island prior to the construction of the permanent quarantine station at West Point.