The name Molong comes from the aboriginal word for 'all rocks'.
William Lee of Kelso is said to have had cattle in the area by 1819. He later held property just north of present Molong, around Larras Lee. In 1826 a military and police outpost was established at Molong, on Governor Darling's orders, as a step in opening up the government stock reserve west of the Macquarie River for settlement.
The Historical Museum is housed in a former hotel (1856), built by rubble-mason James Mortal, who sold it in 1861 to John Smith of Gamboola. Smith let the building to a series of publicans and it later became the residence and surgery for a series of doctors. The Historical Society acquired it for use as a museum, in 1969, with help from the Molong Shire Council.
Molong is located on the Mitchell Highway about 300 kilometres west of Sydney and about 30 kilometres from the city of Orange. It is elevated at 529 metres above sea level. At the 2006 census, Molong had a population of 1,569 people.Charles Sturt visited Molong in 1828. Molong was the site of the first copper mine in Australia, located at Copper Hill just outside of Molong.