In 1958 Donald Horne had been editor of the successful Consolidated Press magazine Weekend for four years. On a promise from Clyde Packer that a small intellectual magazine would be financed if Weekend was a success, Horne established the fortnightly Observer, publishing the first issue in February 1958.

The Observer covered issues that affected business, trade unions, the professions, universities, the public service, minority groups and politics. In addition, the fortnightly newspaper included regular reviews of literature, cinema, art and music. A young Robert Hughes) was employed as critic and artist, producing the artwork for many covers. Bruce Beresford%23L) contributed articles critical of the Australian film industry. Robert Raymond's critiques of Australian newspapers ran for a short time until he was sacked after a rival newspaperman complained to Frank Packer. Book reviews and articles on literary topics were contributed by a number of writers, including James McAuley, Ray Mathew), Vincent Buckley, Xavier Herbert, P. R. Stephensen, Lex Banning, Judah Waten, Christopher Koch{n), Max Harris and Stephen Murray-Smith49).

When Tom FitzGerald's fortnightly Nation began in September 1958, appearing in the alternative week to the Observer, readers were provided, in effect, with a weekly journal of opinion. The Nation and the Observer, distinguished by some as representatives of left-wing and right-wing politics respectively, offered alternative views on the state of Australian society, economy and politics. Critics of the Observer pointed to a cynicism and flippancy that was sometimes seen as undergraduate. Nevertheless, in a contemporary critique of the two fortnightlies, Vincent Buckley favoured the Observer because, he argued, it nurtured a better forum for ongoing discussion. In a valedictory assessment of the fortnightly's success, Peter Coleman, a long-time assistant editor to Horne, described the Observer's mixture of opinion, including New Australians, right wing trade unionists, radical liberals, Melbourne Catholics and Sydney Free Thinkers in his portrayal.

The short life of the Observer ended when Consolidated Press bought the Bulletin in 1961, merging the fortnightly with the longer-lived monthly. In an attempt to revive the flagging reputation of the Bulletin, the new owner's revitalized the format by ending such columns as the long-running reader contributions and commissioning articles on contemporary urban issues. To assist this transition, the literary critics of the Observer supported an expansion of the Bulletin's 'Red Page' and many other columns from the Observer appeared in the monthly. The final issue of the Observer appeared on 18 March 1961.