The first issue of Art in Australia appeared in 1916, edited by Sydney Ure Smith, Bertram Stevens and Charles Lloyd Jones. Initially, all three editors were involved in other projects: Ure Smith, a graphic artist was director of the advertising agency, Smith and Julius; Stevens continued as editor of the Lone Hand; and Jones, the grandson of retailer David Jones, was training as a store manager. Employing the services of highly skilled technicians, Art in Australia published reproductions of extremely high quality, building, over time, a network of important associations with many of Australia's visual artists, advertisers, printers and publishers. During the first five years of operation, the magazine was published and distributed by Angus and Robertson, but the editors retained significant control over the layout and content, frequently ignoring objections from the publisher. The company Art in Australia was incorporated in 1921, becoming the publisher of Art in Australia and several other magazines, including the Home.
At first, the journal was devoted to the pictorial arts but pressure from Norman Lindsay influenced consideration of an expanded scope to include literary works. A literary supplement to Art in Australia was proposed in 1917 and prepared during 1918, but by December the plan had fallen through. Despite Lindsay's plans, Art in Australia published only a small amount of poetry and fiction during the 1920s. Regular contributions were received from Lindsay, his son, Jack, Kenneth Slessor and Hugh McCrae, frequently exhibiting Lindsay's beliefs about literature and art. The Lindsays and Hugh McCrae all had individual numbers devoted to their works, the latter contributing a greater combination of writing and art. Other contributors included Dorothea Mackellar, Zora Cross, Dowell O'Reilly and Furnley Maurice.
Poetry dominated the literary contributions, but an attempt was made in 1924 to encourage the writing of fiction with a short story competition: the winning story was Katharine Susannah Prichard's 'The Grey Horse'. Prichard contributed several other stories and poems, but by the early 1930s literature was rarely printed in Art and Australia. The companion magazine, the Home, however, printed many of these contributors, becoming the more dominant publisher of prose and poetry in the Art in Australia conglomerate.
Art in Australia was an expensive production, relying, in its first years, on advertising and occasional contributions from Jones to meet costs. At its peak price of twelve shillings and sixpence, it was out of the reach of many artists, but changes to format and price, secured a loyal readership and a significant influence on the Australian art scene. Furthermore, profits from the Home often balanced any shortfall by Art in Australia, enabling Art in Australia Pty Ltd to further enhance its reputation in the industry. This was confirmed in 1934 when the Fairfax press bought the magazines, hoping to challenge the dominance of Fashion and Society and Vogue. Ure Smith and Leon Gellert (who became co-editor after Stevens' death in 1922) were retained but the magazines did not produce the challenge Fairfax had hoped for. After an inamicable retirement in 1938, Ure Smith and Gellert were replaced by Kenneth Wilkinson who remained as editor until 1941 when Peter Bellew was appointed for the final eighteen months of the magazine's life. During this time, Art in Australia adopted a more sympathetic position towards modernist art and occasionally published poetry, notably that of Max Harris and Alister Kershaw. Art in Australia ceased operation in August 1942.