The harbour is named after Captain Cortland Simpson, who surveyed the bay while in command of HMS Blanche in 1872.

The Australian Naval and Military Expeditionary Force captured Rabaul during World War I after entering Simpson Harbour.

During World War II, the Imperial Japanese utilised the harbour as a major naval base.

Approximately 65 Japanese ships were sunk in the harbour by Allied air attacks.

The surrender of the Japanese forces of New Guinea, New Britain, and the Solomon Islands took place on 6 September 1945 in a ceremony aboard the aircraft carrier HMS Glory.