The name Second Valley was adopted by Colonel Light in 1836 when his ship was anchored at Rapid Bay. Officially he named it Finniss Vale but referred to it in his journal as 'the second valley', mentioning the fresh water available here from the Parananacooka River.

William Randall was an early landowner who created a subdivision which he called Randalsea. A wharf and later a jetty was built allowing wheat, timber and wattle bark to be shipped from the little port. When wheat yields declined many families left the area and winter storms took their toll on the port structures.

Today it is a popular holiday destination for fishing, swimming and diving. The mill, sea wall and geological features are State Heritage listed. Second Valley Forest is a large area of forestry plantations to the east of the settlement, walking trails have been developed through the area.