The region's initial settlements was concentrated on the port and city, then expanded, notably to the south-west, where the fertile Taieri Plains offered good farmland. The 1860s saw rapid expansion. The name "Otago" is an Anglicization of "Otakou", the name of the Māori village near the entrance to the harbour. The Otago settlement, an outgrowth of the Free Church of Scotland, materialized in March 1848 with the arrival of the first two immigrant ships from Greenock on the Firth of Clyde —the John Wickliffe and the Philip Laing. Captain William Cargill veteran of the Peninsular War was the secular leader: Otago citizens subsequently elected him to the office of provincial Superintendent after the New Zealand provinces were created in 1853. The Otago Province extended from the Waitaki River south, including Stewart Island and the sub-Antarctic islands. It included the territory of the later Southland Province and also the much more extensive lands of the modern Southland commercial expansion after Gabriel Read discovered gold at Gabriel's Gully near Lawrence, and the Central Otago goldrush ensued. Veterans of goldfields in California and Australia, plus many other fortune-seekers from Europe, North America and China, poured into the then Province of Otago, eroding its Scottish Presbyterian character. Further gold discoveries at Clyde and on the Arrow River around Arrowtown led to a boom, and Otago became for a period the cultural and economic centre of New Zealand. New Zealand's first daily newspaper, the Otago Daily Times, originally edited by Julius Vogel, dates from this period.
New Zealand's first university, the University of Otago, was founded in 1869 as the provincial university in Dunedin.
The Province of Southland separated from Otago Province and set up its own Provincial Council at Invercargill in 1861. After difficulties ensued, Otago re-absorbed it in 1870. Its territory is included in the southern region of the old Otago Province which is named after it and is now the territory of the Southland region.