Allan Cunningham passed along the Goulburn River and Halls Creek below Sandy Hollow in 1825, on his explorations of the Upper Hunter. He then ascended Mount Dangar to the west to gain a better view of the surrounding country.
Sandy Hollow began as a campsite for travellers on the junction of the Goulburn River Valley and Halls Creek.
"Thunderbolt" the bushranger was active in the area and in 1867 held up the Denman to Merriwa Mail.
In 1918 a route for a railway line between Maryvale and Sandy Hollow was surveyed. Construction started in 1941, stopped towards the end of World War II and then resumed in 1946, only to be wound up again in 1950. Finally, in 1977, White Industries opened a coal mine at Ulan and the railway was completed to Ulan in 1982 to transport coal to the Port of Newcastle.
During the 1940s oil bearing shale was trucked from a mine at Baerami to retorts at Sandy Hollow for refining. After the Second World War this soon became uneconomical. The retorts closed down and little remains today as testimony to this industry.