The harbour sits in an eroded caldera of the ancient Banks Peninsula Volcano,[1] the steep sides of which form the Port Hills on its northern shore.

[2] The harbour's main population centre is Lyttelton, which serves the main port to the nearby city of Christchurch, linked with Christchurch by the single-track Lyttelton rail tunnel (opened 1867), a two lane road tunnel (opened 1964) and two roads over the Port Hills.

The harbour provides access to a busy commercial port at Lyttelton which today includes a petroleum storage facility and a modern container and cargo terminal.

The harbour was one of approximately 90 places to be given a dual name as part of a landmark Treaty of Waitangi settlement with the Ngāi Tahu iwi in 1998.

[6][4] This name came from a swamp of raupō reed that grew prolifically in the vicinity of Ōhinetahi, or Governor's Bay, at the head of the harbour.

[11] The New Zealand Pilot of 1875, which is based on Stokes' survey, gives the Māori place name as Tewhaka, translating simply as 'the harbour'.

Ngāi Tahu and Ngāti Mamoe used the islands as a source of shellfish, birds eggs and flax, as well as stone for use in tools.

[16] The nearby Ripapa Island has evidence of more permanent habitation, and was the location of a prominent defensive Pā built by the Ngāi Tahu chief Taununu.

[3] The pā was attacked during the 1820s by another group of Ngāi Tahu consisting of various hapū from across the South Island as part of the Kai huanga feud.

[3] Rīpapa was used in World War I to intern German nationals as enemy aliens, the most notable being Count Felix von Luckner.

Upon the initial settlement of Canterbury, the harbour became a centre of activity for the early European settlers owing to its easier access when compared to the swamplands in present-day Christchurch.

As immigration grew, Quail Island was offered as a quarantine station to provide facilities for inbound ships with illness on board.

[3] The growing population of Lyttelton and the harbour's position as the arrival port for many new settlers facilitated the development of new links to the wider island.

[24] In 1962 New Zealand Railways started the Interislander ferry service on the 55 nmi (102 km) route between Picton and Wellington.

This competing service not only offered a shorter crossing but also used diesel ships that had lower running costs than the Union Company's turbine steamers.

[24] She lost money, survived on a Ministry of Transport subsidy from 1974 and was withdrawn in 1976,[24] leaving the Interislander's Picton route to continue the ferry link between the two islands.

[44] The Department of Conservation responded that SailGP held the event in the full knowledge that protecting the dolphins from the impact of boats would be paramount.

[46] Paul Theroux described Lyttelton Harbour as "long and lovely, a safe anchorage" in The Happy Isles of Oceania.