It was located in what is now the eastern part of Målselv Municipality, stretching from the border with Sweden in the east, through the Dividalen and Rostadalen valleys to the Målselva river and the eastern part of the Målselvdalen valley.

The first element may be derived from the present tense form of the verb øve which means "to exercise" or "to practice".

It was part of the Målselv prestegjeld and the Indre Troms prosti (deanery) in the Diocese of Nord-Hålogaland.

During World War II, the German army created a military base at Øverbygd.

The base was initially a supply point for the German forces attack on Murmansk.

They also built large stock barracks, a cold storage plant, and a German military hospital.

The municipal council (Kommunestyre) of Øverbygd was made up of 13 representatives that were elected to four year terms.