Westerly began as a student-edited magazine of the Arts Union of the University of Western Australia in December 1956. Published three times a year, the magazine had an annual editorial turnover until 1962 when J. M. S. O'Brien began a term which lasted until 1965. From the beginning, Westerly struggled to find a balance between serving the West Australian region and maintaining an intellectual connection with the eastern states and the rest of the world. Attempting to encourage writing in the region, Westerly sought poetry and fiction from emerging writers, but it was not until the early 1960s that contributions of a consistently high quality were received.

When J. M. S. O'Brien finished his term as editor, Westerly was produced by a group of editorial associates, rather than a clearly defined editor, until 1975. Bruce Bennett, Peter Cowan and John Barnes, members of the English Department, acted as primary editors during this time until Bennett and Cowan were appointed joint editors in 1975. Delys Bird and Dennis Haskell, also members of the English Department, began their term as co-editors in 1993. Published by the Centre for Studies in Australian Literature since 1982, Westerly maintains a strong connection with the English Department at the University of Western Australia.

During the 1960s Westerly concentrated on original work, publishing the first works of a number of significant writers, including Frank Moorhouse, Murray Bail and Michael Wilding (qq.v.). The number of poems also increased during this time. Westerly attracted contributions from Bruce Dawe, Chris Wallace-Crabbe, Gwen Harwood, Dorothy Hewett, Fay Zwicky, Hal Colebatch and William Grono (qq.v.). Westerly continued to attract quality fiction and poetry in the 1970s, publishing the work of a number of writers, including Vicki Viidikas, T. A. G. Hungerford, James McQueen, Peter Murphy, Peter Goldsworthy, Wendy Jenkins, Jean Kent, Richard Carey and John Bryson (qq.v.).

Reviews and criticism were not plentiful during the 1960s, partly because Perth's The Critic already performed that function for the local community. This changed slowly during the 1970s following the establishment of a BA course in Australian literature at the University of Western Australia in 1973. By the late 1970s, the number of reviews and articles had steadily increased to cater for students of Australian literature, but the editors tried to avoid an overly academic tone to maintain a broad readership.

Westerly occasionally produced special issues during the 1960s and 1970s. This became more regular in the late 1980s and 1990s when the fourth issue of the year concentrated on a particular theme. One of the more significant has been Westerly's special issues on South East Asia. Earlier issues display an interest in countries common to the Indian Ocean, but this gradually expanded to include the wider Asian region. The extent of this concentration is exhibited in the book of extracts Westerly Looks to Asia: A Selection from Westerly 1956-1992 (1993). Other special issues have examined Australian Jewish writing, the relationship between Australia and the Mediterranean, environmental issues and justice.

Like most literary magazines, Westerly has struggled to attract funding. Early volumes included a significant amount of advertising. The financial burden was eased when the first ongoing grant from the Australian government was received in 1963. Westerly has since received assistance from the university and state and national bodies, but this funding steadily decreased during the 1990s. As a result, the magazine changed format in 1996. Four years later, as a result of continuing financial pressure, Westerly affiliated itself with John Kinsella's literary magazine Salt. An editorial note stated that this resulted in 'wider distribution, and a broader and more international profile, putting it in a unique position among Australian literary magazines.' With this affiliation, Westerly has appeared annually since 2000, sharing the year (and subscribers) with Salt, which appears during the first half of each year. Westerly continues to cover West Australian, Australian and Asian literature while Salt offers subscribers an annual of European and American literature.