It connects to the Timor Sea in the north via Dundas Strait.

Most of its area is also gazetted as a locality with the name Van Diemen Gulf.

The gulf was named after the Dutch colonial governor, Anthony van Diemen (1593–1645).

[3] Phillip Parker King and his crew in the 76-tonne cutter HMS Mermaid surveyed the coastline in early 1818, encountering local Aboriginal people and proas sailed by Makassans, and passed by the Gulf on other voyages.

[6] On 4 April 2007, most of the area occupied by the Van Diemen Gulf was gazetted as a locality with the name Van Diemen Gulf by the Northern Territory Government, who also included it in the local government area of the West Arnhem Region.