The island was named by explorer Matthew Flinders on 25 February 1802, after the municipal and parliamentary borough of Grantham, Lincolnshire, England.

[5] In December 1909, the Flinders Brass Band arranged a picnic to Grantham Island.

[7] In 1937, the 28 ft cutter Sylvia was wrecked in Port Lincoln harbour on returning from a picnic on Grantham Island.

The steamer Iron Monarch was going astern from the jetty when the cutter passed behind it to inspect the vessel.

Two men clung to the rudder of Iron Monarch's propeller while is turned, while the other four aboard climbed into a dinghy which had been towed behind the cutter.