Founded on the 9 September 1840, on land donated by local landowner, Elizabeth Underwood, who was subdividing "Ashfield Park" in an area halfway between Sydney and Parramatta. The first service was given by rector Joseph Kidd Walpole, with an address by the Bishop of Australia, William Grant Broughton.
The presumed first grave was of Elizabeth Underwood's grandson, Frederick Underwood (1844 – 1845).

The church building is the oldest authenticated surviving building in Ashfield, which is now a suburb of Sydney.

The earliest remaining parts of the building are one of the first Sydney designs by the colonial architect Edmund Blacket, who later became renowned for his ecclesiastical architecture

The expansive church grounds contain a cemetery dating back to 1845. It was consecrated by the Archbishop of Sydney, Howard West Kilvinton Mowll on 8 September 1934.

A number of notable former Ashfield residents are buried at St John's:
* John Limeburner (1743 – 1847) First Fleet convict, transported for stealing clothing to the value of about one pound, arrived as part of the First Fleet, on the Charlotte, landed in Sydney January 1788. Eventually died in 1847 aged 104. His headstone was defaced by vandals in 1965
* Elizabeth Underwood (1791 – 1858) pioneering landowner, founded the village of Ashfield
* Abraham Hearn (1775 – 1861)
* Randoph John Want (d. 1869)was a solicitor and member of the New South Wales Legislative Council
* Thomas Walker (1804 – 1886) philanthropist, banker, magistrate, politician. He was the President of the Bank of New South Wales established in 1817, now known as Westpac, he funded the land for the Sydney Foundling Hospital, now the Infants Home. He owned and developed Yaralla Estate. After his death funded the establishment of the Thomas Walker Convalescent Hospital in Concord, Sydney. Is in a family grave with his wife Jane, and daughter Eadith's ashes
* Samuel Henry Terry (1833 – 1887) a wealthy landowner and politician is also buried at St Johns, having spent the last part of his life in an Ashfield residence named The Lilacs
* Henry Halloran (1811–1893) was a poet and resident of Ashfield and was married to Elizabeth Underwood's daughter Elizabeth
* Edward Thomas Jones Wrench (1828 – 1893) was one of the founding partners of real estate agents, Richardson and Wrench
* Louise Taplin (1855–1901) was matron of The Infant's Home Child and Family Services for 15 years until her death, and led the home through the 1890s depression, despite a shortage of salaried staff
* Dame Eadith Walker (1861 – 1937) daughter of Thomas Walker, philanthropist, recipient of Commander of the Order of the British Empire (1917) and Dame Commander of the Order of the British Empire (1928)
* Amy Schauer (1871 – 1956) was a cookery instructor and author
Several members of the Wilkinson and Underwood families were significant in the early European settlement of the Ashfield district
The graveyard also contains members of the Taverner, Uhr and Rodd families, after whom the localities Taverner's Hill, Uhr's Point and Rodd Point are named.
There are also graves of three former rectors: T. H. Wilkinson, W. Lumsdaine, and J. C. Corlette, and members of their families, together with a pioneer clergyman, E. Rogers.

Beside these prominent figures, many of the St John's graves contain children. Typhoid and whooping cough epidemics took heavy tolls in the Victorian period. Although Ashfield was known as a healthy area, many families lost two or even three children.
 
Burial rates at St John's declined rapidly around the turn of the 20th century. The rector's notes from the time indicate that many funeral services conducted at the church now preceded burial at Rookwood Cemetery. Although the cemetery has never officially been closed, no burial plots have been sold for some years. A memorial garden for the interment of ashes was opened in the time of J. R. Seddon, providing a popular resting place for the Ashfield community.