In the early years of British settlement the area was known as Prospect Hill and was the site of the first land grants to emancipated convicts in 1791. In this period it was one of several areas of conflict between the Darug people and the settlers, the Darug people being led for many years of guerrilla warfare by Pemulwuy.

The area later became differentiated into Prospect, to the west of Greystanes Creek, and Greystanes to the east of the Creek, the latter taking its name from a historical home on Prospect Hill, built by Nelson Simmons Lawson, third child of Lieutenant William Lawson. The name 'Grey Stanes', given by Nelson Lawson, came from the outcrops of basalt on Prospect Hill, "Grey" being its colour and "Stanes" being the Scottish word for stones. The land was originally granted to William Cummings in 1799, before being acquired by William Lawson in approximately 1810.  (Wikipedia)