Edward John Eyre explored the area on land in 1840 and 1841 on a journey to Western Australia from Port Lincoln. Originally named Waterloo Bay, the township was later named by Governor Sir William Jervois on a plan for the town on 23 November 1878. Locally it is believed to be named after the writer and educator Ellen Liston who was born in England in 1838 and emigrated to South Australia in 1850. She was a governess working on a local property (Nilkerloo) owned by John Hamp.