By the late 1890s demand for quality agricultural land in Western Australia focused attention on the heavily forested areas near Manjimup. A report by surveyor Terry in 1898 identified good land on the Wilgarup River, and an Agricultural Area was declared. There was also some demand for small lots, and in 1902 lots were surveyed near Balbarrup and it was decided to declare a townsite. The Nelson Roads Board nominated Manjimup as a name, and the townsite of Manjimupp was gazetted in 1903. The double "P" spelling was used because the Lands Department had adopted spelling rules for Aboriginal names where doubling a consonant shortened the following vowel (otherwise the pronunciation could have been Manjimoop).

In 1909 the government decided to extend the railway from Bridgetown to Wilgarup. The terminus of the line was to be close to the original Manjimup homestead, which is about 5 km west of the 1903 townsite. The proposed station was named Manjimup, and a subdivision was recommended at the site. The new townsite was named Manjimupp, and gazettal took place in 1910. The original Manjimupp was renamed to Balbarrup the same year. The locally accepted spelling however was Manjimup, and the double "P" was officially changed in 1915.The railway line was opened for traffic in 1911.