The surrounding area, a catchment and source of the Manawatū River (approximately 20 Min drive north of town) has developed into dairy, beef cattle and sheep farming, which now provides the major income for the town's population of 5,680.

Before European settlers arrived in the 1870s, the line of descent for Māori in the area was from the Kurahaupō waka.

The tribe of the area is Rangitāne, with geographic distinction to Te Rangiwhakaewa in the immediate Dannevirke region.

The first known 'Aotea' meeting house was established approximately 15 generations ago (from 2010) followed by the building of a marae at Makirikiri near Dannevirke at about the same time as the first Nordic settlers arrived from Napier and Hawkes Bay.

[citation needed] The town was founded on 15 October 1872 by Danish, Norwegian and Swedish settlers, adherents of Scandinavism, who arrived at the port of Napier and moved inland.

The settlers, who arrived under the Public Works Act, built their initial settlement in a clearing of the Seventy Mile Bush.

[3] The Dannevirke after which the town was named is an extensive Viking Age fortification line in Denmark which had a strong emotive symbolic role for 19th-century Danes, especially after the site had fallen into German hands in the German-Danish War of 1864 – a recent and very painful event for these settlers.

[11][12] Totara College hosts the Dannevirke Garden and Craft Expo, an annual event that has grown to a considerable size.

Ewen Chatfield, who was an important member of the successful New Zealand cricket team of the 1980s Hadlee-Coney-Crowe era, is from Dannevirke, as is former All Black Duncan Hales, who now resides in the United States.

Other Dannevirke All Blacks were Colin Loader (1950s), Blair Furlong (1970 to South Africa), Lui Paewai who is widely acknowledged as the youngest All Black in history at just 17 years old (1924 Invincibles) and whose brother, nephews and grand-nephews (Doc, Hepa, Nathan and Murdoch respectively) went on to have good careers for Hawkes Bay and the New Zealand Maori side, and Roy White (post-war All Black in 1946 and 1947).

[13] Due its high altitude the summer temperatures are often cooler compared to other Eastern North Island towns, such as Masterton, Napier and Gisborne, while in winter Dannevirke can regularly experience frosts as in other parts of New Zealand.

[32] Totara College of Accelerated Learning is a co-educational state-integrated Year 1–13 school,[33] with a roll of 63.