Australia's isolation as an island continent has done much to shape—and inhibit—its culture. The Aboriginal peoples developed their accommodation with the environment over a period of at least 40,000 years, during much of which contacts with the outside world, often hinging on changing sea levels, appear to have been fleeting. The British, on the other hand, when they settled New South Wales as a penal colony in 1788, did so partly because of its remoteness. The convict heritage ensured that European perceptions of the environment were often influenced by the sense of exile and alienation. Yet often the distance from Britain, and the isolation it imposed, served to strengthen rather than weaken ties with the cultural metropolis. The ambivalence of the continuing colonial relationship, which has only been dismantled in the second half of the 20th century, has been a central cultural preoccupation in Australia.

Australia substantially reflected the heritage of the British settlers. Customs were modified as the settlers adapted to the new country and its exceptionally fine climate. A culture evolved that, although based on the British tradition, is unique to Australia. The increasing sophistication of Australian culture has been promoted by government subsidies for the arts and the provision of improved facilities. Many cities and towns have built or expanded art galleries and performing art centers. The architecturally stunning Sydney Opera House is the best known of the modern venues. Opera, ballet, and dance companies, symphony orchestras, artists, playwrights, and writers are supported by the Australia Council. The federally funded Australian Broadcasting Corporation controls independent television and radio stations. Australia also has many other media companies, newspapers, and magazines that contribute to local culture, although some are now owned by foreigners.

The frontier has also exercised a powerful influence over the European imagination. For many years landscape dominated Australian painting, but the images were often Arcadian (as with the early Tasmanian painter John Glover) or were associated with pastoral settlement. The so-called Heidelberg school (in the late 19th century, Heidelberg was a semirural suburb on the fringe of Melbourne), influenced by both contemporary European Impressionism and Realism, created a romantic image of a sunlit, pastoral landscape: the works of Tom Roberts, Arthur Streeton, and Frederick McCubbin have become popular icons. After World War II, painters such as Russell Drysdale and Sidney Nolan were drawn to the dramatic isolation of the Outback, while Fred Williams' inspired deconstruction of landscape patterns has led some to acclaim him as Australia's greatest painter.