Clyde is located in an area known as The Dunstan named by an English surveyor, John Turnbull Thomson. He was the second white man to enter the region in the spring of 1857. It is believed he used the name Dunstan because the mountains reminded him of his birthplace in England where Dunstan means “a stone on the hill” Thomson was probably inspired by the schist tors dominating the landscape.
Originally known as Upper Dunstan, Clyde like many Central Otago towns and settlements owes its existence to gold which was discovered in the region in 1861. The following year two miners, American-born Horatio Hartley and an Irish immigrant to the United States, Christopher Reilly, tried their luck on the banks of the Clutha River then called the Molyneux. They found vast quantities of gold in the gorge above where Clyde now lies. Knowledge of their deposit of 87 pounds of gold in Dunedin caused an uproar and the Dunstan Gold Rush was on.
Within a year between 15 and 20 thousand miners were digging along the banks of the river and the surrounding gullies. By the end of the first year, the field had yielded close to 2,000 kilograms (70,000 ounces) of gold. By about 1870 traditional mining methods at the Dunstan field came to an end and gold was extracted by sluicing and dredging companies (at one stage about 30 dredges operated on the Clutha River between Clyde and Alexandra).
Although Clyde began life as a “canvas” town, permanent structures appeared in the late 1860s when the occupants of tent sites were given the opportunity to buy the title to their land. The death of Lord Clyde, commander of the British forces during the Indian mutiny, who died in August, 1863 was commemorated when the Post Office officially adopted the name Clyde. A year later it was proclaimed a municipality after sixty-one people signed a petition calling for local government representation. The town was the administrative centre for the district until 1989 when it was relocated to nearby Alexandra.