During the 1950s, Ford's Australian sales were faltering due to the popularity of the Holden, and the lack of an effective competitor. Ford assembled the Zephyr and its Consul and Zodiac derivatives. However, while these cars were moderately successful and had a good reputation, Ford could not match Holden's price, and so sales suffered. One of the reasons for the price difference was the higher cost of imported parts, which were subject to an import tariff. Ford also assembled Canadian sourced Ford V8 models, but these cars were in a higher price category, putting them out of reach of the average buyer. Hence, Ford decided to commence local production of a Holden challenger. Initially they intended to produce the Zephyr. However, during a visit to Ford headquarters in Detroit in 1958, they were shown the new Falcon, which was being prepared for its US launch. Immediately, the executives were attracted to the new car- it was about the same size as Holden, but it was low, long, wide and modern. The width allowed it to accommodate 6 people, and an automatic transmission was available. Besides all this, Ford Australia felt they had more experience building North American cars. Hence they decided to make Falcon their new Australian car. In 1959, Ford built a factory at Broadmeadows, a suburb of Melbourne, for local production of the North American Ford Falcon. The factory was designed in Canada, and had a roof which would facilitate dispersal of snow- notwithstanding snow does not fall in Melbourne. The first Falcons sold in Australia, from September 1960, were designated the XK and were essentially a right hand drive version of the North American model. The station wagon was shortened at the rear due to concern that the back of the car might scrape on rough roads. Billed as being "Australian- with a world of difference", Falcon offered the first serious alternative to Holden, and became an instant success. Sales were aided by the contemporary FB series Holden being perceived as lacklustre and dated by comparison. However, before long, XK sales suffered from complaints about the durability on rough outback roads; the car earned the unflattering nickname "Foul Can" during this time. Ford Australia introduced some local design changes to the XL in early 1962, such as a heavier suspension system. Also, the appearance was changed with a new Thunderbird roofline. Nevertheless, the Falcon was still widely perceived as unsuitable for local conditions and sales stagnated. Ford stuck with the Falcon and sales gradually increased over the following years as improvements to durability and reliability were applied.

The XM, released in 1964, was the first Falcon with an Australian-designed body, although it differed little in appearance from US models. The following model, the XP, saw the Fairmont introduced as an upmarket variant. XP was the "make or break" Falcon- Ford's future in Australia depended on this car succeeding. Ford's Deputy Managing Director Bill bourke conceived a promotion for the new model which was a major gamble: demonstrate the XPs strength by mercilessly driving a fleet of XP Falcons around its You-Yangs testing grounds for 70,000 miles at over 70 mph. The gamble paid off with the Falcon winning the prestigious Wheels Car of the Year award. Again, Holden played into Ford's hands: they released the unpopular HD in 1965, which helped stimulate interest in the new Falcon. The next new model Falcon- the largely American styled XR (the styling was based on the 1965 US model) won the Wheels Car of the Year award in 1966 giving Ford two straight wins. The XR was promoted as the "Mustang bred Falcon". The marketing focus on the Falcon's relationship with the Mustang's sporty appeal led to Ford introducing a GT variant of the XR in 1967, featuring a 289 cubic inch V8 sourced from the Mustang. The GT heralded the dawn of the Aussie muscle sedan. All of the original XR GTs were painted in the colour 'GT Gold', except for eight that were "Gallaher Silver" and another five that were "Russet Bronze, Sultan Maroon, Polar White, Avis White and Ivy Green". The non-gold GTs, while having the same specifications, are the rarest of the early Australian muscle cars. The 1968 XT model featured a mild facelift, with a divided grille and fog lamps for the GT. The GT also gained narrow pinstripes along the sides of the car. The XT also had a choice of two larger 6 cylinder engines- the 188 CID (3.1 litre) and 221 CID (3.6 litre) respectively. With the XW in 1969, the GT gained a bigger V8, the 351 cubic inch (5.8 L) Canadian-made Windsor engine, producing 291 hp (217 kW). The XW also gained a GS ('Grand Sport') model, with a 302 Windsor and optional 351. The GS lasted until the 1978 XC series, when the runout Cobra GS coupes were built. GTs remain valuable collectors' cars and this is especially true of the XY GT, released in 1970, in which the Windsor was replaced by a 351 Cleveland, producing 300 hp (224 kW). An upgraded Cleveland, in the 1971 XY GTHO Phase III, produced 385+ bhp (287 kW). The Phase III was the world's fastest four-door production car for many years and was good for 240 km/h. Power figures are still debated today as Ford still claimed 300 hp as the standard 351 Cleveland V8 in the GT though the GTHO Phase III received many modifications to increase its reliability and race performance. Here is a recent auction for one of these: XY Falcon GTHO The end of production of the Falcon in the US paved the way for much greater Australian input in the design of Australian-made Falcons, from 1972 onwards, although for several years there was still a distinct resemblance to US-made Mustang. The XB Falcon bore a strong resemblance to the 1970-71 Ford Torino Sportsroof bodystyle. During 1976 Ford Australia started producing the Cleveland V8s locally. The Falcon, while popular, was usually outsold in Australia by GM Holden's Kingswood until 1978, when Holden decided to replace the Kingswood with a smaller model called the Commodore, based on the European Opel models. Holden gambled that predicted increase of oil prices during this era would drive consumers to choose smaller, more fuel efficient car, but the oil price rise never materialized. Ford Falcon remained number one seller in Australia until 1988, when Holden returned to the full-size Australian sedan design.

Falcons featured prominently in the George Miller films Mad Max and its sequel, Mad Max 2: The Road Warrior, mostly in the role of police patrol cars. A 1973 XB Falcon GT was the basis for the black Pursuit Special driven by protagonist Max Rockatansky (a car famously referred to as "the last of the V8 interceptors"). One XA and two XB sedans were the basis for the blue and yellow police interceptors in the first film. The original car was sold after the first movie and had to be repurchased for Mad Max 2 after the original film was a hit. A replica was destroyed in the second film and the restored original is displayed in the Cars of the Stars museum in the United Kingdom. There are a number of replicas around the world; one company will build a Pursuit Special replica to order as well as the blue/yellow cars. A Falcon was also blown up in the movie Mission: Impossible 2 while IMF agent Ethan Hunt was attempting to leave the Biocyte Facility on an island in Sydney, Australia. An EL GT Falcon was available to drive in the Australian Release of the game Need For Speed III: Hot Pursuit.