It was founded in 1840 and served as New Zealand's first national capital until 1841, when the seat of government was moved to Auckland.

The car ferry across the Bay of Islands, which provides the main access to Russell, runs between Okiato and Opua.

Pōmare II, the chief of the local Ngāti Manu Māori tribe (iwi) in the 1830s, sold land at Okiato to British merchant and ship owner Captain James Reddy Clendon, who settled there in 1832 and set up a trading station with partner Samuel Stephenson.

When the Treaty of Waitangi was signed in February 1840, Lieutenant-Governor William Hobson instructed the Surveyor-General, Felton Mathew, to report on possible locations for a capital in the Bay of Islands.

Clendon's property met the requirements for a good anchorage and immediate availability of land suitable for subdivision and on-sale to settlers.

Kororāreka (present-day Russell) was discounted as it had insufficient available land, and locations such as Paihia and Kerikeri were bypassed for various reasons.

[3] Clendon wanted 23,000 pounds for the 1.24 km2 of land, the house, two small cottages, a large store and other buildings.

Hobson and his family moved there in May 1840 and officials, troops, workmen and immigrants took up residence in permanent or temporary buildings and tents.

In January 1844 Governor Robert FitzRoy officially designated Kororāreka as part of the township of Russell.

Now the name Russell applies only to the erstwhile Kororāreka, while Okiato has resumed its original name.

The results were 89.8% European (Pākehā); 16.6% Māori; 1.3% Pasifika; 3.0% Asian; 0.9% Middle Eastern, Latin American and African New Zealanders (MELAA); and 3.0% other, which includes people giving their ethnicity as "New Zealander".