In 1783, Samuel Sanders (a timber merchant) bought the land now occupied by Denmark Hill and Herne Hill from the Manor; he then began granting leases for large plots of land to wealthy families.

The first known reference to Herne Hill was published in 1789. There are numerous suggestions for the origin of the name: it may have been previously called Heron's Hill, as the River Effra attracted a large number of herons; George and Benjamin Herne were residents in the 17th century; and there was a nearby field called Le Herne (c.1495), 'the angle or corner of land'.

By the mid-19th century, the road from the modern Herne Hill Junction to Denmark Hill was lined with large residential estates and the area had become an upper-class suburb (John Ruskin spent his childhood at an estate on Herne Hill).

Herne Hill was transformed by the arrival of the railways in 1862. Cheap and convenient access to London Victoria, the City of London, Kent and south-west London created demand for middle-class housing; the terraced streets that now characterise the area were constructed in the decades after the opening of Herne Hill station and the old estates were entirely built over.