Historical reports of earthquake effects from the period 1681 to 1877 in Java, Bali, and Nusa Tenggara are used to independently test ground‐motion predictions in Indonesia’s 2010 and 2017 national probabilistic seismic hazard assessments (PSHAs). Assuming that strong ground motion occurrence follows a Poisson distribution, we cannot reject Indonesia’s current and previous PSHA for key cities in Java at 95% confidence, although the results suggest an incremental improvement in the updated PSHA. The source mechanisms of important historical earthquakes are estimated by undertaking a grid search of source parameters and using ground‐motion models (GMMs) and ground motion to intensity conversion equations (GMICEs) to forward model intensity at each intensity data point. Bayesian inference is applied to calculate the distribution of source parameters given the historical intensity data. The results demonstrate that large intraslab earthquakes have been responsible for major earthquake disasters in Java, including an intraslab earthquake near Jakarta in 1699 and an event in 1867 in Central Java. The results also highlight the potential for large earthquakes to occur on the Flores thrust, with a cluster of large earthquakes rupturing the Flores thrust in 1815, 1818, and 1820. The results show that large shallow crustal earthquakes () occurred in regions of Java where active faults have not been mapped, highlighting the need for further research to identify these faults for future seismic hazard assessments. We do not find conclusive evidence for the occurrence of large earthquakes on the Java megathrust during the time period of this study; however, because of difficulties using intensity data to discriminate between subduction intraslab and interface sources, we cannot exclude megathrust source models for the 1699 and 1867 events, and note other possible megathrust events in 1757, 1780, and 1851.