In 1863 the Baptist congregation transferred its Sunday services to the School of Arts and then later to the Odd Fellows Hall, but the small chapel was retained for weeknight meetings until the present building was erected. During these years the congregation came under the care of Bathurst Street Baptist, which for the greater part of 1836 to 1868 was the major channel of Baptist life in the colony. 

The first reference to the Newtown Baptist Chapel in the minutes of the Mother Church is in October 1853 and then again in January 1856 when it is reported that the Church has raised "a large sum for the repair of the chapel at Newtown". These minutes also state that the Newtown chapel is well attended and that 40 to 50 children attend the school regularly. Further references in the Bathurst Street minutes up to 1860 show that the services held in the Newtown Chapel and the administration of its affairs were under the control of a committee appointed by the Mother Church. Then, in May 1860, the Bathurst Street minutes record that 13 members who attend services in Newtown requested the formation of Newtown Baptist Church. They relinquished their membership from Bathurst Street and made Newtown there new home.

The formation of the Newtown Church was made possible by the arrival of a Baptist minister from Nova Scotia. He is referred to as "The Reverend Dr Hobbs". He was a doctor of medicine in addition to being a minister. The Sydney Morning Herald reports his arrival on 3 April 1860, saying that he had been bound for New Zealand, but learning that the Maori war was in progress, had come to Sydney. The next evening a meeting of the Colonial Missionary Society was being held at Bathurst Street Church to hear that efforts to procure a minister from Newtown form England had been unsuccessful. While the meeting was in progress and members of the Society were discussing where they might turn with some hope of obtaining a pastor for the new work, it was reported that a Baptist minister was in the city inquiring where he might find Baptists' and stating that he was willing to serve "in any place where he would be useful". Dr Hobbs served the Newtown Church until June 1862. 

He was followed by Rev A W Murray, the former LMS missionary. He served the church until 1863 at which time he returned to his missionary work in the Islands. 

In November 1863, Mr George Sheppard, who had been a student in Spurgeon's College and who was on a visit to Sydney, was persuaded to take up the work. On 3 June 1867 Newtown Baptist Church gained formal recognition. When the Baptist Association was formed in 1868, it was the Newtown Church which joined with Harris Street Church to constitute it. The reports of the first Annual General Meeting of the Baptist Association disclose that in 1868 there were 62 members of the Newtown Church.

Services commenced in the building's present form in 1870.

(Source: Some Fell on Good Ground - A History of the Baptist Church in New South Wales, Australia by Alan C Prior)