[5] Naracoorte was formed from the merger of two towns, Kincraig, founded in 1845 by Scottish explorer William Macintosh, and Narracoorte, established as a government settlement in 1847.

The name has gone through a number of spellings, and is believed to be derived from the Aboriginal words for place of running water or large waterhole.

As a consequence, in February 1924 the Corporate Town of Naracoorte was established to provide dedicated local governance to the township.

Naracoorte has historically been a service centre for the sheep, cattle and wheat farming industries in the surrounding area.

In recent decades, tourism has become a major industry due to the town's proximity to several wine regions and internationally recognised natural features.

Both the World-Heritage-listed Naracoorte Caves National Park,[9] the Ramsar-listed Bool and Hacks Lagoons are south of the township.

Since mid 2019 it has been owned by Australian Community Media, who purchased the Rural Press publications when Fairfax was bought by Nine.