The area was first charted by Dutch explorers in 1516, but it was not until the early 1900s (decade) that Kavieng town was founded by the German colonial administration. Though some on the island became quite wealthy with the development of copra plantations, Kavieng itself remained a tiny settlement, with as few as eighty residents. After the First World War, Kavieng, as part of Papua New Guinea, was ceded to Australian control. This resulted in the deportation of German missionaries and the seizure of all German property in the town.
On 21 January 1942, during World War II, Kavieng came under a massive aerial bombardment by Japanese forces. That night, the vast majority of Australians were evacuated from New Ireland. The Japanese invaded and occupied the island on 24 January. Over the next two years, almost all of the Europeans who had remained on the island were killed by the Japanese. Rear Admiral Ryukichi Tamura gave the order to kill all the European prisoners in Kavieng if an imminent invasion by Allied forces was expected. At least twenty-three of these were executed in the Kavieng Wharf Massacre in March 1944, which later led to the perpetrators being sentenced for war crimes. By the time the Allies retook the island in 1945, Kavieng had been almost completely destroyed.
As a result of the Japanese occupation and subsequent Allied invasion there are a number of wartime relics in the town, most notably a large gun sitting above a bunker adjacent to the Harbour Road. Although not officially open to the public, the bunker has several openings allowing entry, and the gun position provides an extensive view of the harbour.
Today Kavieng is home to a thriving tourism industry. Dive, trekking, and surf tourism predominate with all of the tourism depending on the rich biological diversity of New Ireland. The surf tourism industry has entered into partnerships with local land and reef owners to develop what they refer to as a "surf management
