Primary historical records on Vaughan Chinese Cemetery are scant. Its origins lie in the great Mount Alexander alluvial goldrush of 1852-54. The cemetery is situated on a small rocky hill overlooking the junction of the Loddon River and Fryers Creek, one of the richest spots on the goldfield. Gold seekers chose a convenient patch of ground where gold was unlikely to be found. The cemetery remained in use until 1857. With the arrival of large numbers of Chinese gold seekers from 1854, burials in the cemetery appear to have had been predominantly from this population. This was a reflection of the field's changing nature: European miners preferring to follow the rush to new goldfields, while the Chinese were willing to put long hours into winning gold from worked-out and badly disturbed ground.
The Vaughan Chinese Cemetery is of historical, archaeological and scientific importance to the State of Victoria.
The Vaughan Chinese Cemetery is historically important due to its association with a key event in Victoria's history and a defining moment in the development of Australia's character and culture. The cemetery is also significant as an artefact that is strongly associated with Chinese miners, a connection still apparent in 1929 when the cemetery was restored using money raised within the Chinese communities at Castlemaine and Bendigo.
The Vaughan Chinese Cemetery is historically and scientifically important as a very rare artefact of Victoria's greatest gold rush. A comprehensive archaeological survey of the Castlemaine district undertaken in 1989 concluded that ' because of the ephemeral nature of structures and technology (predominantly, timber and human sweat) employed in the early gold-rush days there is little physical evidence of the intensity of activity and cathartic social experience sustained by the study area during the rush years. The significance of this site is also derived from its setting: the cemetery overlooking the gold-bearing flat and the once-large town that grew around the diggings.