The area is traditionally part of the rohe of Ngāi Tai ki Tāmaki, and the name Ōtara refers to Ōtara Hill / Te Puke ō Tara, a former Ngāi Tai ki Tāmaki pā and volcanic hill to the north of the suburb.

After the construction of the Auckland Southern Motorway in the 1950s, Ōtara developed as a suburb, primarily as part of a state housing project by the New Zealand Government.

[3][4] The hill is either named for the Waiohua ancestor and taniwha of the Manukau Harbour, Tara-mai-nuku, or for the 19th century paramount chief of Ngāi Tai ki Tāmaki, Tara Te Irirangi.

[11] Ōtara Hill / Te Puke o Tara is a volcano located to the north in East Tāmaki that erupted an estimated 56,500 years ago,[11] and was quarried in the mid-20th century.

Tāiki settled with his followers along the eastern shores of the Tāmaki River, alongside the descendants of Huiārangi of the early iwi Te Tini ō Maruiwi.

[16] The upper reaches of the river near modern was traditionally known as Te Wai Mokoia, referring to Mokoikahikuwaru, a protector taniwha of the Tainui waka who is described in legends as taking up residence at the Panmure Basin.

[22] While all of these groups hold ancestral relationships to the Ōtara area, Ngāi Tai continue to retain recognised mana whenua status.

[28][25] In 1851, William Goodfellow purchased Otara Farm along the south-eastern shores of the Tāmaki River, where he built a homestead.

[30] The Goodfellows were joined by Reverend Gideon Smales, who settled a 400-acre (1.6 km2) block purchased from the Government in 1856 at East Tāmaki.

During this time, the Te Ākitai Waiohua rangatira Īhaka Takaanini was arrested and died on Rakino Island.

In 1919, the Dilworth Trust subdivided the property, and in 1950 sold much of the land to the Ministry of Works, who established the Otara Fertiliser Research Station at the site of the former school.

[38] The development of the Auckland Southern Motorway in the mid-1950s led to an explosion in the population of Papatoetoe and Manurewa to the south.

[40][41] Ōtara was chosen as a site for a state housing project due to its proximity to the motorway and the industrial areas of Ōtāhuhu and Penrose,[42] and it was the second large-scale state housing development in Auckland aimed at low-income families, centred around a retail and community centre, following Glen Innes.

[43] In August 1958, a Memorandum of Agreement was signed between the Ministry of Works and the Manukau County Council to develop Ōtara, and within 10 years over 3,000 houses had been built.

[42] In June 1958, Otahuhu Foodtown, the first supermarket in New Zealand, was opened by Tom Ah Chee in the future site of Ōtara, who pooled his resources with two other Auckland produce shop owners, Norman Kent and John Brown.

[45] In 1968, the Otahuhu Power Station was opened in Ōtara, which at the time was the largest gas turbine in Australasia,[46] and operated until 2016.

[50] The suburb achieved a mild degree of worldwide fame with the one-off hit single "How Bizarre", by hip-hop artists OMC.