The windmill was built to grind the wheat and corn of the Moreton Bay penal settlement, but its winds were fickle. As early as 1827, with a large crop to process, the settlement's storekeeper recommended a treadmill, and the notoriously harsh commandant Patrick Logan saw a double use in it: a machine that would grind flour and punish convicts in the same turning. Prisoners trudged the wheel for hours, their labour milling grain that fed the settlement that imprisoned them. The mill ground its last grain in 1845, and the treadmill was gone before 1849. The structure that survives is largely rendered stone and brick, about 8.4 metres across at the base and tapering to roughly 4.5 metres at the top, standing some 16 metres high beneath its observation cabin and time ball.

On 3 July 1841 the disused tower became a gallows. The settlement's Foreman of Public Works, Andrew Petrie, ran a heavy beam out of an upper window and hung the nooses from it. The two condemned were Aboriginal men: Mullan, also recorded as Merridio, and Ningavil, also written Neugavil or Nungavil. They had been convicted in Sydney as accessories to the killing of Assistant Surveyor Granville Stapylton and a convict of his party, William Tuck, near Mount Lindesay in May 1840 - the surveyors were mapping the district to open it for settlement, work that pressed onto Aboriginal land. Returned north to Moreton Bay, the two men were hanged before a crowd that included about a hundred Aboriginal people, most of whom stayed to bury them afterward. These were Brisbane's first legal executions, and the men who died were not abstractions. They had names, kin, and a community that came to mourn them at the foot of the tower.

After the milling stopped, the tower's fate hung in the balance. In December 1849 it was auctioned to a government official who promptly advertised for someone to demolish it and cart away its machinery, the sale terms demanding it be cleared within three months. The wreckers never came. Instead, from 1855 the tower found a second life as a signal station, relaying shipping news between the mouth of the Brisbane River and the town. Renovations in 1861 added a time ball - a sphere dropped at a set hour so the townsfolk below could set their clocks and watches. A signalman's cottage and detached kitchen were later built nearby, used, and eventually demolished, leaving the tower once more alone on its hill.

The Old Windmill kept finding new work. From the 1920s it served as a base for experiments in early radio, telephony and even television - among the first such transmissions in Australia broadcast from this convict-built shell, the oldest structure in the state pressed into service for its newest technology. By 1945 the Brisbane City Council recognised the tower as a beloved visitor attraction and began preserving it; restoration in 1950 stripped and re-rendered the whole structure, and further conservation followed in the 1980s and in 2009. Today it presides over Observatory Park, flanked by Wickham Park and King Edward Park, with the cylindrical Tower Mill Hotel opposite deliberately echoing its rounded form. A lookout now, it gazes over a city that has forgotten almost everything the tower once witnessed.