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The township of Daylesford is located between Castlemaine and Creswick, within a region that contains Australia's largest concentration of natural mineral springs.

A gold rush occurred in the area when alluvial gold was found in 1851, with the town of Daylesford being surveyed in 1854.

While Daylesford's initial growth was due to the thousands of workers looking for gold, the town is much more famous for the bubbling mineral waters which flow from its many springs. Coupled with its beautiful mountain scenery, forests, gardens and lakes, Daylesford and neighbouring Hepburn Springs have become major tourist, holiday and alternative lifestyle towns. There is a thriving industry built around physical and spiritual wellness including spa treatments, massages and acupuncture.

The commercial centre of Daylesford is located along Albert Street and Vincent Street. It features a generous collection of historic buildings including the post office (built in 1867), town hall (1882), and several hotels and shops.

Many of Daylesford's streets are lined with deciduous trees that erupt into a blaze of colour during the autumn season.

Lake Daylesford, which covers land upon which gold was first discovered, was created in 1929 and is located in the beautiful Central Springs Reserve, just a few minutes walk south of the town centre. There is a cafe built right beside the lake, picnic spots, walking tracks and several mineral springs. Jetties are provided for fishing and for those wishing to hire rowboats or other pleasure craft.

A short walk east of the town centre is the Wombat Hill Botanical Gardens which were first established in 1863. They are situated on an extinct volcano and offer good views over the surrounding countryside from its manicured lawns and pathways. The gardens also feature a rotunda, lookout tower and conservatory.

Jubilee Lake is located a couple of kilometres south of Daylesford, constructed in 1860 as a water supply. These days it is a scenic spot idea for fishing, boating and swimming, just a short walk from a mineral spring. A few kilometres further south is Sailor's Falls - a 30 metre cascade of water into a deep gorge, surrounded by a reserve.