Though unsuitable for farming, the Wasaga area had an abundance of trees. In the late 1830's and throughout the rest of the century the logging industry would play an important role in the development of the area. The Nottawasaga River served as a natural route for the logs to be transported to the lumber mills. There were several mills up river and larger mills across the bay in Collingwood.

As the industry flourished, several proposals were made for either a railway or canal that would have the mouth of the Nottawasaga as its terminus. The proposal for the canal would have run from Lake Ontario to Lake Huron, utilizing the Nottawasaga River for the latter part of the route. Although several surveys for the canal were done, the plan proved to be too expensive and the canal was never built. The proposition for a railway would have seen a route connecting York (Toronto) to Georgian Bay. Because of the lack of funds and an uncertain political climate this scheme was postponed. In 1844 the scheme was revived and in 1851 construction began on the first leg the line which was to run to Barrie. In 1852 various routes to Georgian Bay were surveyed, two of which led to the mouth of the Nottawasaga.

Plans for a town named Hythe to be established at the Mouth River were made as the whole district was poised for the development boom the railway would bring. Establishing a commercial harbour at the mouth of the Nottawasaga was viable as the schooners, tugs, and steamers of the day easily navigated the lower reaches of the river. However in 1852 an unfortunate event occurred which may have  influenced the future of Wasaga Beach.

A large schooner from Buffalo arrived and was caught in a storm as it was anchored offshore where it was to be loaded with grain taken out to it by small scows, a common practice at the time throughout the Great Lakes. The doomed vessel could have entered the Nottawasaga,  but would draw to much water once loaded and would be unable to make it's way out. Caught out in the open shallow bay the empty boat was run aground. The waves battered the vessel causing it to break up. The schooner was a complete loss. The wreck, underlining the deficiencies of using the Nottawasaga as a harbour, may have been a deciding factor, which led to the railway officials decision to end the rail line several miles to the west at what is now Collingwood. Had this one storm not occurred and the railway come to Wasaga Beach, industry and commercial development would surely have followed. This was not to be so for the next few decades the area continued to be used for logging and some small-scale fishing.

Finally in 1870 a man named John Van Vlack purchased 69 acres of land near the Nottawasaga and would be one of the area's first permanent resident's, paving the way for real settlement and the beginnings of a village. Van Vlack fished commercially, established a shingles mill, operated a general store and became the first postmaster for the area. A small village eventually grew around the Van Vlack property populated by millhands and other early settlers. By 1896 a population of 70 resided in what was known as Van Vlack. The settlement grew slowly with a bridge being built over the river two years after Van Vlack arrived and the opening of a hotel in the mid 1880's by a women named Jane Summerfeldt. Most of the settlement of this period was connected to the logging and on a lesser degree the fishing industry. In the 1880's however the agricultural development of the fringes of the Wasaga area was starting  to take place.

The early settlers grew turnips, oats, wheat and peas. The more prosperous ones also owned horses and oxen. It was in this period that the first official use of the name Wasaga Beach occurred. With the Village of Van Vlack located in Flos Township, the beach area was referred to as the top end of Sunnidale Township. With the subdivision of lots in the township, one subdivision was called Wasaga Beach, which was clearly derived from the word Nottawasaga.

The name must have taken some time to pass into common use as The Elmvale Chronicle referred to this area as "the beach" throughout the 1890's. As the century grew to a close logging began to wind down as most of the large trees had been cut down. Despite the dwindling timber supply, there was enough wood still being cut to keep the mill at Van Vlack running until 1914.
The settlement of  the Wasaga Beach  area  however small, was ready to enter into the next century with much credit to John Van Vlack who was clearly a man of energy and initiative, and the early lumberjacks, millhands, and settlers  who worked hard to develop the area in what must have been difficult conditions.