Grasmere is located 65 kilometers from the Sydney central business district it is in the local government area of Camden Council and it is located in the Macarthur region. The area we know today as Grasmere was once the home to the Gandangara people of the Southern Highlands region. The Muringong people southernmost of the Darug people were also know to inhabit areas around the Southern Highlands.
John Macarthur the wool pioneer was granted 500 acres of land in this area in 1805. Macarthur went on to breed a fine wool sheep and was famous within the wool industry. The land was located in what was called Cowpastures, but we now know as Camden. Grasmere is still a very rural area, with no business parks, industry or high rise developments. The area is surrounded by Brownlow Hill, Mount Hunter and Ellis Lane.