The town was founded on wheat-growing early in the 20th century (proclaimed on 11 December 1913), but the cleared land is also suitable for raising merino sheep.

The Karoonda Development Group instigated and built a larger-than-life sculpture of a Merino ram in the park in the main street to emphasise this.

Each year the Karoonda Farm Fair is held, a two-day event attracting over 10,000 visitors to the town.

There is some amazeing silo art done by Heesco over the winter months of 2019 also the playground is a good car stop for kids of all ages Pioneer Park on East Terrace is being developed as a Malleelands Pioneer Railways and farm museum, with displays of harvest machinery, ploughs, railway rolling stock and facilities already in place.

[14] Karoonda has a mediterranean-influenced semi-arid climate (Köppen: BSk), with very warm, dry summers and mild, somewhat wetter winters.

[15] The Lowaldie railway station was 6.25 miles (10.06 km) east of Karoonda and also had a small town surveyed, with a school and post office operating for some time.