The site where Booligal township developed was originally a crossing-place on the Lachlan River on the "Boolegal" pastoral run (which had been taken up by the Tom brothers). The township developed on the opposite side of the river to "Boolegal" station (later known as "Bank" station). The builder Edward Roset and his family were living at the locality by about 1856. Edward Roset’s wife Bridget died on 27 February 1857, just one week after her 22-month-old daughter had died of dysentery; Bridget Roset and her daughter were the first interments in the Booligal cemetery. Edward Roset constructed a hotel at Booligal (possibly in collaboration with Neil McColl), which probably operated initially as a sly-grog shop. In 1859 Robert Whiteus was operating a punt at the locality.
The township of Booligal was laid out by Surveyor Edward Twynam and gazetted as a township in July 1860. In December 1860 it was reported that a store and two public-houses were being erected in the new township. Licences for the two hotels were initially refused by the Bench of Magistrates at Hay "on account of there being no police belonging to the locality". On appeal however the applications for licences at Booligal were granted. Neil McColl became the licensee of the Drovers' Arms Hotel (possibly the renovated Roset's hotel) and John Ledwidge was granted a licence for the Booligal Hotel. On 31 January 1861 – "the first red letter day at this new township on the Lower Lachlan" – both hotels were opened to the public.