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The name is derived from the Wangerriburra word Mundunlgunn meaning death adder.
In 1842 William Humphries and Paul and Clem Lawless, took up a depasturing licence on land on the Albert River. Humphries took up Mundoolun and the brothers took up Nindooinbah. In 1844, Humphries sold part of the property to his second cousin and her husband, Ann and John Collins. By 1847 the Collins family was in full possession of the property.
John and Ann Collins settled at Mundoolun in a slab hut in 1846. The couple had five children. The family went on to own Tamrookum, Rathdownie and Nindooinba. Sons Robert and William later formed the North Australian Pastoral Company in the Northern Territory. A world tour by the brothers led to their interest in the preservation of national parks. Robert later became the Independent Member for Albert in the Queensland Legislative Assembly, and Queensland branch president of the Royal Geographic Society in an effort to further his dream of establishing national parks. He did not live to see the proclamation of the Lamington National park in 1915, which he and Romeo Lahey had worked towards.
John Collins died in August 1898 and Ann in January 1901. The family then commissioned the design and construction of a church in honour of their parents. John Buckeridge who was the official Diocesan Architect of Brisbane designed the church. Construction was supervised by Robin Dodds, who designed another important local church, All Saints at Tamrookum, for son Robert Martin Collins in 1915. St Johns was completed in 1901 as a memorial to John and Ann Collins. It is one of a few privately owned chapels in Queensland. The church and the adjoining cemetery are both on the State Heritage Register. The remains of John Allen are held in the Mundoolun Cemetery. He is otherwise known as Bullum and is best remembered for the work he undertook in documenting the language of the Wangerriburra tribe.
The Mundoolun property remains in the hands of Collins descendants, the Fraser family. The original homestead burnt down in 1939, and resident of the time, Mrs D.M. Fraser was able to save only the portrait her father-in-law Simon Fraser. Simon Fraser had married Ann Bertha, daughter of John an Ann Collins in 1885.
Michael Fraser has been both a councillor and Mayor of Beaudesert Shire Council. During 1986-87 he undertook the construction of a new homestead at Mundoolun, using timber sourced from the property. Timber was milled at the Logan Village sawmill. Former Prime Minister Malcolm Fraser is a cousin to the residents.
Throughout the early 1980s, locals lobbied for a new bridge to be built over the Albert River at Mundoolun. Many accidents had occurred here, but progress on rebuilding was dependent on the construction of the Wolffdene Dam which had been planned since the 1970s. By 1988 a new demountable bridge was promised by the Main Roads Department, but the floods of March-April 1989 washed the decking away and the project was fast tracked.