In 1951, a group of six local businessmen decided to build a new track. About 2 km away from the original circuit, it still bears the corner name signs of the original circuit. As the piece of available land was on the edge of the coast, the track is known for its steep grades – the highest 57 metres – which caused cost overruns and delays in track opening. The new track hosted its first race in 1956, but after extensive damage from the 1962 Armstrong 500, the circuit could not afford repairs and the race moved to Bathurst.

The circuit reopened in 1966 and hosted the Phillip Island 500K endurance race, final round of the Australian Manufacturers’ Championship, from 1971 to 1977. But again, due to its testing terrain, the circuit required much maintenance and slowly declined through the 1970s. It was farmed by its owners while closed and was then sold in 1985 in preparation for reopening, but did not do so until 1989 after agreement on a long term lease and rebuild agreement. The World Motorcycle Championship gave the circuit a grand re-opening in 1989 with a brilliant race long dice in the 500 cc division between Wayne Gardner, Wayne Rainey, Christian Sarron and Kevin Magee.

The race was won by Gardner to the delight of the huge crowd. It hosted its first World Superbike race in 1990. Mathew Close won the first race in 1990 by 11.31 sec. The Australian Touring Car Championship also returned in 1990 with Dick Johnson winning.