It is the northernmost settlement of any real size on the West Coast, and is located 96 kilometres (60 mi) northeast by road from Westport.

Apart from a narrow coastal strip, the town of Karamea and its local area are completely surrounded to the south, east and north by Kahurangi National Park.

The town consists of two small settlements, Market Cross and Karamea proper, located about 1 kilometre (0.62 mi) apart.

The evidence suggests that the site was used by Māori as a temporary stopping place on the route down the coast to collect pounamu.

There is significant evidence of stoneworking, including local pounamu as well as argillite, obsidian, and chert imported from elsewhere in Aotearoa.

In the early 1870s, the Nelson Provincial Government investigated the use of Special Settlement Areas as a way of developing remote parts of the province, and attracting immigrants.

[8]: 63  The planning of the settlement was placed under the control of Eugene O'Conor, Provincial Secretary, and member of the New Zealand House of Representatives.

They were initially allocated small sections of pakihi – flat boggy land with infertile, waterlogged soil high up on a terrace to the south of the Karamea River.

[10] The road from Westport to Karamea was severely damaged by large landslides, and telephone lines were broken completely isolating the town.

[12] The earthquake disrupted efforts underway at the time to control an outbreak of diphtheria in the settlement, and it was necessary for serum to be delivered by air.

[15] Small coastal vessels were used to transport people and supplies between Westport and the Karamea harbour while the road was rebuilt.

[19] Apart from a narrow coastal strip, the town of Karamea and its local area are completely surrounded to the south, east and north by Kahurangi National Park.

[25] The combined river mouths have formed a shallow mudflat and salt marsh estuary with an area of approximately 400 hectares (990 acres).

[27] A small specially protected area of wetland known as Ōtūmahana Reserve was established at the south-east corner of the estuary in 1983.

In 1899, a large flood swept away a new bridge across the river and caused damage to settlers homes, farms and crops.

[34] Deposits of silt raised the level of the river bed and led to a greatly increased risk of flooding in the townships of Karamea and Market Cross.

[35] On 30 December 1929 there was heavy damage in Karamea and Arapito from a sudden flood attributed to the breach of a dam created during the earthquake.

[38] Over the next few years, stop banks and training walls were constructed on the north side of the river to help mitigate the flood risk to the town.

[43] In July 2020, the West Coast Regional council secured funding to support Clean Streams Karamea, a locally based not-for-profit environmental group.

The funding will enable the raising and planting of 315,000 trees along 80 kilometres (50 mi) of riparian margins of waterways through farms.

Dairy farming and tourism are the main economic drivers, and the service industry employs approximately a quarter of the workforce.

[49] Other former industries in the area include sphagnum moss, possum control, fishing, and fine furniture production.

[52] Tourists visit Karamea all year round to enjoy the many scenic attractions in the region, including Kahurangi National Park.

[53][54] The southern end of the Heaphy Track, one of New Zealand's nine "Great Walks", is at the Kohaihai River, about 20 kilometres (12 mi) north of Karamea.

Lobbying activities to allow the return of mountain biking on the Heaphy Track continued through until 2011, when a three-year trial began.

[64] Karamea township offers local services including a general store, supermarket, petrol pumps, information centre, cafe, hotel, camping ground, motels, backpackers, art & craft shop, and a community library.

The museum collections include photographs and exhibits on the local industries of sawmilling, dairying, gold mining, flax milling and shipping.

[66] Until 1908 there was no church in Karamea; services were conducted in private homes, and a minister would visit from Westport or Mokihinui, often having to take an arduous coastal route along beaches and rocks.

After the death by drowning in August 1906 of the crew of the Rangi while taking soundings on the Karamea Bar, the Westport vicar Rev Dart held services.

He suggested locals might like to acquire a memorial, such as an organ, but the people of Karamea organised the construction of a church, taking three months and costing £69.