The site of the town of Gisborne belonged conjointly to the Rongowhakaata and T'Aitanga-a-Mahaki tribes. In March, 1868, the nucleus (741 acres) was bought by the Crown. It was bounded on the east by the Turanganui River, on the north by the Taruheru River, on the west by a line which, to-day, marks Lytton Road, and, on the seaward side, by an irregular line along the edge of Waikanae swamp. As the chiefs feared that Samuel Locke (the Crown Agent) might prefer to negotiate for Kaiti, they reduced their price from £20,000 to £2,000. When the Crown Grants Commission issued the title as to native ownership (5/8/1869), the agreement was found to be missing. It was surmised that it had been burnt when Major Biggs's home was destroyed by the rebels in the previous November. No deposit had been paid.

A fresh agreement was made on 9 August, 1869, between W. S. Atkinson, R.M., and the following natives: Riparata Kahutia, Raharuhi Rukupo, Mokena Pakura (or Kohere), Hori Karaka, Renata Ngarangi, Eparaima te Kura, Pita Ngunu, Rota Waipaia, Hirini te Kani, Rutene Kuiata, Kingi Hori (“King George,” a nephew of Te Kani-a-Takirau), Tamihana Ruatapu, Henare Ruru, Wi Pere, Hoera Kapuaroa, Keita Waere (Kate Wyllie), and Paora Parau.

The block was surveyed by Alexander Munro (a nephew of Sir D. Munro). He was assisted by Samuel Begg (who became a prominent artist on The London Illustrated News). The township was named Gisborne in honour of the Hon. William Gisborne, M.L., Colonial Secretary in the Fox Ministry. For many years some of the old residents—pakehas and Maoris alike—would not drop the native designation Turanganui. A number of the best business sites were disposed of at the first auction sale, which was held at Napier in April, 1870. The highest figure for a quarter-acre lot in the inner area was paid for the Masonic Hotel corner (£51). Next highest price was £50 for the Union Bank site. Good's Corner fetched £40. The site on which McKee's Buildings stand brought only £19, as it was considered “rather out of the way.”

Miller's Corner was given to Major Ropata, and a four-roomed cottage was placed on it for him by the Government. In April, 1875, he sold the property to A. Blair for £900. Mokena Kohere was presented with the Herald site. Plenty of good sections were available at low prices in June, 1874. The Opera House site was then priced at only £23, the Power Board office site at £22, and Townley's Corner at £29. In 1875 Captain Read offered W. Dean Lysnar 10 acres, running from Gladstone Road to Palmerston Road, at £25 per acre.

The European population of Gisborne in 1874 was 554. By 1886 it had grown to 2,194. In 1906 there were 5664 European residents in the town, which then included Kaiti and Whataupoko. For 1926 the figures (including Mangapapa and Outer Kaiti) were: Europeans, 12,848; natives, 282. The 1945 census showed: Europeans, 14,052; natives, 713. Within the “Gisborne urban area,” which comprises the borough and portions of Cook County regarded as suburban to Gisborne, the 1945 aggregate was 16,984 (inclusive of 873 natives), plus 3 per cent. as an allowance for residents absent on war activities. In 1948 the estimated population of the combined area was 18,500.