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This area in Northeast Arnhem Land has been home to the Yolngu Aboriginal people for at least 40,000 years.

Matthew Flinders, in his circumnavigation of Australia in 1803, met the Macassan trading fleet near present-day Nhulunbuy, an encounter that led to the establishment of settlements on Melville Island and the Coburg Peninsula. A beach close to the township is named Macassan Beach in honour of this encounter.

In 1963, a Federal government decision excised part of the land for a bauxite mine to be operated by the North Australian Bauxite and Alumina Company (Nabalco). The Yolngu aborigines at Yirrkala were strongly opposed, and forwarded a bark petition to the Australian House of Representatives, which attracted national and international attention and which now hangs in Parliament House, Canberra.