The name Narooma is said to be derived from a word in the local Aboriginal language (one of the Yuin dialects) meaning "clear blue waters".

[4] The name Narooma is said to be derived from a word in the local Aboriginal language meaning "clear blue waters".

[7] There had been an earlier settlement nearby at Punkalla, which was a port for Bodalla and Nerrigundah; a ruined jetty and timber mill can still be seen there.

Gold was discovered nearby at Central Tilba in 1880 and a post office was opened at present-day Corunna (to the south, in Eurobodalla Shire), named "Noorooma".

The town is represented by the Narooma Devils, who play in the local Group 16 Rugby League competition.

There are various explanations for how the rock formed into this continental likeness, including that it is simply a natural result of thousands of years of erosion of the ancient chert and shale headland.

One of the more interesting tales is that the hole was created inadvertently when a ship was moored to the heads with large chains.

[15] It is considered to be a spectacular and challenging course, with views of Montague Island to the east and Glass House Rocks to the south.

The Great Southern Blues Festival was held here annually on the October Long Weekend until it moved to Batemans Bay in 2010.

The festival returned to Narooma in 2013, and continued to be held each year on the October Long Weekend until it ceased in 2015.

The town's drier, sunnier winters are owed to its position on the leeward side of the dividing range.