The name is derived from the aboriginal word tentunola, which means boxwood / brushwood hill or camp.

The township of Tantanoola is situated in the Hundred of Hindmarsh, 425 km south east of Adelaide, and was once a portion of Mayurra Station.

It was the second town of importance on the Mount Gambier to Rivoli Bay railway line which was built in 1878, converted from narrow to broad gauge in 1957 and ceased operating to freight in April 1995 then Limestone Coast Railway tourist passengers on 1 July 2006 which spanned across 128 years between Tantanoola and Mount Gambier.

[citation needed] The historic Tantanoola railway station is listed on the South Australian Heritage Register.

The area includes the Snuggery Power Station with three diesel-powered gas turbines, and the Kimberly-Clark woodchip and paper pulp mill.