The township of Sunshine was earlier known as Braybrook Junction. The Braybrook Junction Post Office opened on 25 August 1890.
In 1904 H. V. McKay bought the Braybrook Implement Works. In 1906 McKay moved his agricultural machinery manufacturing business from Ballarat to Braybrook Junction. This established the Sunshine Harvester Works which became the largest manufacturing plant in Australia. McKay had also secured 400 acres (1.6 km2) of land at Braybrook Junction with the aim of establishing housing to encourage his workers to settle in the area.
In 1907 the locality was renamed Sunshine, after residents had petitioned to change the name in honour of the Sunshine Harvester Works. The name “Sunshine” is assumed to have been given by McKay to his harvester works after he attended a lecture by the American evangelist Reverend Thomas De Witt Talmage who visited Victoria in 1894.
Also in 1907 an industrial dispute between owner H. V. McKay and his workers at the Sunshine Harvester Works led to the Harvester Judgement, the benchmark industrial decision which led to the creation of a minimum living wage for Australian workers.
H. V. McKay’s concept for Sunshine, the Sunshine Estate, was for a community developed according to the ideals of the Garden city movement, an influential town planning movement of the early 20th century. Infrastructure and amenities established by McKay included electric lighting, parks and sporting grounds, public buildings, schools and a library and the town became regarded as a model industry-centred community. Housing for the Sunshine Harvester Works’ employees had swelled the local population and the town of Sunshine was touted as the “Birmingham of Australia”.
The Sunshine train disaster on 20 April 1908 killed 44 people at Sunshine station.
In 1909 H. V. McKay Sunshine Harvester Works Pipe Band was formed. This is one of Australia’s oldest continuously functioning pipe bands and still exists as the Williamstown R.S.L. Pipe Band.
Sunshine was not immune when many Australian-based manufacturing industries started winding down during and after the 1970s. In 1992 the Massey Ferguson factory, formerly the Sunshine Harvester Works, was demolished to make way for the development of the Sunshine Marketplace.