Otford was first known as Bulgo. The name Bulgo was first marked on Robert Dixon's 'Map of the Colony of New South Wales' in 1842 and the name was in use for some time after. When the construction of the Illawarra (now officially South Coast Line) line was taking place a village formed in 1885, with four houses. The name was changed to Otford in May 1885. During that year the village grew and the first school was built, as well as a post office. In 1887 a hotel was present, along with a butchers store, bakers shop, tailor, jeweller and general store. Otford also had a billiard room and skittle alley. After construction of the railway had finished the village went into decline and the school was closed in 1893. Trains on the line stopped at Otford to take in water and a small railway and sawmill centre developed at the entrance to the tunnel.