The completion of Grubb and Tyson's sawmill tramway in early 1856 created an easy all-weather walking track, from the Mowbray Hotel through the hills to the upper reaches of Piper's River.
With increasing interest in the newly accessible area, the government decided to mark out a town in 1860, calling it Underwood - perhaps after the well-known auctioneer JC Underwood.
The new town would be located next to a popular ford in the river, a little downstream from the sawmill.
It was a good idea, but not successful.
There was a rough track over Fingerpost Hill, as well as the tramway, but neither would take a dray.
A move to upgrade the track to a cart road failed for lack of interest from contractors.
This wasn't surprising, given the steep and rocky terrain.
Nor were settlers interested in the newly surveyed land at Underwood. Those who came up to look, preferred the flatter and more fertile land further north.
Quickly acknowledging their error, the government asked surveyor Richard Hall, still camped by Piper's River after finishing the Underwood survey, to mark out land for a road north and on towards Bridport and Scottsdale.
This became known as Hall's Track.
With commendable optimism, farmers established themselves along Hall's Track through the 1860s and '70s, despite the difficult access.
Many of the settlers were hard-working Germans, refugees from conscription and turmoil associated with the unification of the small German states into a nation.
The little hamlet at Upper Piper became widely known as German Town.
Having a strong belief in education, the local people built their own one-room school in 1870, supplanting informal classes in private homes, and in 1873 they gained an official post office when a leader of the schoolhouse project, Gottlieb Sulzberger, was endorsed as their first postmaster.
The settlement grew through the 1880s, encouraged by improving access and a gold rush at Lisle.
From just one church, a schoolhouse and three houses, they gained a police station, stores, hotel, blacksmith, brick kiln, butter factory and new homes including a manse.
Their expansion motivated others to settle at Underwood, which had acquired a Catholic church in 1874, and gained a hotel in 1880 and post office in 1885.
It was in 1885 that residents began using the name Lilydale.
This avoided using "Upper Piper", which was more associated with the district, and the informal "German Town".
The new name became official through the post office department in 1887, followed by the new railway station using the name in 1889.
The railway brought considerable prosperity, due to the then-easy access to Launceston.
Land previously uneconomic was brought into production and the population further increased.
Not surprisingly, the focus of Lilydale development shifted from Hall's Track to Station Road.