Vaucluse is located 8 kilometres north-east of the Sydney CBD. Vaucluse is located on the South Head peninsula, just south of The Gap with Sydney Harbour on the west and the Tasman Sea to the east. The Sydney Harbour side of the suburb commands views across the harbour to the Sydney Harbour Bridge.

Vaucluse is a mainly residential suburb. For many years, it was the most affluent suburb in Sydney and in terms of houses and properties is still in the top five most expensive suburbs.

Before European settlement, the area where Vaucluse is now located was inhabited by the Birrabirragal aboriginal clan, who belonged to the coastal Dharug language group. The first European activity in the area took place not long after settlement, when a makeshift signalling station was set up on the ridge overlooking the ocean. Its role was to signal the colony if a ship was approaching. Pilots based at Camp Cove, Watsons Bay could then meet the ship and guide it through the harbour.

The original Vaucluse House, from which the area derived its name, was built by Sir Henry Browne Hayes, who had been transported to New South Wales for kidnapping the granddaughter of a wealthy Irish banker. Sir Henry Browne Hayes, an avid admirer of the 14th-century poet Petrarch, named the house after Petrarch’s poem about the famous Fontaine de Vaucluse near the town L’Isle-sur-la-Sorgue in southern France. In 1827, the small but charming cottage was bought by William Charles Wentworth. The property is listed on the Register of the National Estate.