Sandown Racecourse dates to the nineteenth century as a horse racing facility, but closed in the 1930s during a government rationalisation program and was later redeveloped. A bitumen motor racing circuit was built around the outside of the proposed horse racing track — which was not completed until 1965 — and opened for use in 1962. The circuit hosted its first Australian Touring Car Championship race in 1965. The opening meeting on 11–12 March 1962 featured the Sandown International Cup, contested by Jack Brabham, Jim Clark, Stirling Moss, Bruce McLaren, and John Surtees.
From its opening until 1983, and again in modified form from 1989, Sandown's layout emphasised the two long parallel straights — front and back — each measuring approximately 900 metres. This configuration rewarded power and placed a premium on braking stability. The original pit complex was situated between what became turns one and four under the later layout; when pits were relocated in 1984 to their permanent position at the head of the main straight, over A$600,000 was spent on infrastructure meeting international FIA standards.
Sandown hosted the Australian Grand Prix on six occasions. Two Formula One World Champions won the race there: Jack Brabham in 1964 and Jim Clark in 1968. Clark's margin of victory was 0.1 seconds over Chris Amon's Ferrari, one of the closest finishes in the event's history. John Goss's victory in 1976 made him the only driver to win both the Australian Grand Prix and the Bathurst 1000. The final Sandown AGP was held in 1978, marking the event's fiftieth anniversary. Special guest Juan Manuel Fangio, the five-time Formula One World Champion, participated in a demonstration run after the race driving his 1954–55 Mercedes-Benz W196.
The Sandown 500 endurance race, first held in 1964, became one of Australian touring car racing's most important fixtures. For much of its history it served as the principal lead-in event to the Bathurst 1000. The race ran at Sandown continuously from 1964 until 2007, returned in 2012, and continued as part of the Supercars Championship calendar. Craig Lowndes and Warren Luff won the inaugural return event in 2012 in a Team Vodafone Holden Commodore.
In 1984 the track was extended to 3.878 km to comply with FIA minimum length requirements for World Championship events, with the aim of hosting a Formula One Grand Prix — a goal ultimately awarded to the Adelaide Street Circuit. The extension routed the circuit through a tight infield section widely criticised as slow and inaccessible to spectators. During this period Sandown hosted two rounds of the FIA World Sportscar Championship: the 1984 Sandown 1000 (won by Stefan Bellof and Derek Bell in a Rothmans Porsche 956) and the 1988 360 km of Sandown Park (won by Jean-Louis Schlesser and Jochen Mass in a Sauber Mercedes C9). The 1988 race was the final event on the extended layout.
In 1989 the unpopular infield section was bypassed and the circuit returned to 3.104 km using the outer National Circuit. Rather than restoring the original eight-turn layout exactly, the new configuration used thirteen turns by incorporating the reconfigured outer loop, bringing cars closer to the spectator banks that had been popular in the 1970s. This layout has remained the basis for modern events at the circuit.
A substantial repaving and safety upgrade was carried out in 2013 under FIA guidelines, adding tyre barriers, catch fencing, and extended runoff at the end of the back straight following a series of accidents between 2010 and 2017. Under local council permit, the venue is limited to five motorsport events per year at no louder than 95 decibels. The long-term future of Sandown remains uncertain as the Melbourne Racing Club, which owns the site, has sought rezoning for potential sale to property developers.