The historic name of the area literally means the hillock of Majnu, after the tilla or mound where during the reign of Sikandar Lodhi (r. 1489–1517) on Delhi Sultanate, a local Iranian Sufi mystic Abdulla, nicknamed Majnu (lost in love), met Sikh Guru, Guru Nanak Dev Ji on 20 July 1505.

Majnu ferried people across the Yamuna river for free as a service to God, his devotion resulted in the guru Ji staying here till the end of July.

[9] Just as Aruna Nagar was developing, the 1959 Tibetan uprising took place in March, most residents of Majnu-ka-tilla left Tibet in 1959–60, when the Dalai Lama too went into exile to Dharamshala.

[4] In June 2006, the colony was served a court-issued notice indicating that it would be demolished in connection with the Delhi government's road expansion and Yamuna River beautification plan.

[15][16] In March 2013, Government of Delhi included New Aruna Nagar (Tibetan refugee camp) in its list of 895 "to-be-regularised colonies".

[17] On 20 June 2013, during the North India floods, the Yamuna river breached its banks and inundated numerous houses in the low-lying area.

[6] Another important aspect of the economy is home rentals as a large population is cramped in closely built houses, several floors high and approachable through narrow bylanes.

[9] In addition, there is a market of retail stalls, including bookshops, curio shops, metalsmiths, and a beauty parlor; internet cafes, and travel agencies.