Like so many of the towns on the Derwent River Ouse was explored soon after the establishment of the settlement at Hobart Town. However settlers did not move into the area until the 1820s.
One of the first buildings in the town was the Anglican Church of St. John the Baptist.In the 1830s when St Peter's Church was being built at Hamilton people began to settle around the present site of Ouse. Although there was only 16 km between the two settlements the Anglican church decided that the journey every Sunday over rough roads was too difficult for committed parishioners and so by 1842-43 the Ouse Bridge Chapel of St John the Baptist had been erected. The building was constructed with a combination of local contributions and voluntary labour. The church was consecrated in 1867 and, today, it is notable for its impressive stained glass windows and its interesting memorials to the early settlers in the district.
There seems to have been some confusion over the town's name in the mid nineteenth century. In the 1840s it was known as Ousebridge which by the 1850s had become Ouse Bridge. By the 1860s it had been reduced to Ouse.
The town's brief brush with literary fame occurred in the 1820s and 1830s when David Burn, Australia's first playwright, lived in a country house named Rotherwood near Ouse. His play The Bushrangers was performed in Edinburgh in 1829 and in 1842 a collection of his writings, Plays and Fugitive Pieces, was published in Hobart. It was the first collection of plays published in Australia.
Other buildings in the area which date from this period include 'Cawood', a two storey Georgian stone house which was built in the late 1820s and stands off Tor Hill Road and the 'Millbrook Water Mill' in Victoria Valley Road which dates from 1843.