The island has been populated for thousands of years by the Melanesian Torres Strait Islanders. Waibe, is the traditional name given by the traditional land owners and it 'Cat Fish' In 1877, an administrative centre for the Torres Strait Islands was set up on the island by the Queensland Government.
By 1883 over 200 pearling vessels were based on the island in a very lucrative industry. This industry attracted workers from around Asia, including Japan, Malaya and India. Additionally, many south Pacific Islanders worked in the industry, many of whose ancestors were originally imported against their will. While the pearling industry has declined in importance, the mix of cultures is evident to this day.
During World War II, Thursday Island became the military headquarters for the Torres Strait and was a base for Australian and United States forces and in January 1942, civilians were evacuated and residents of Japanese origin or descent were interned. The island was spared from bombing in World War II, due, it was thought, to it being the burial place of many Japanese pearl shell divers, or possibly the Japanese thinking there were still Japanese residents on the island. However, neighbouring Horn Island was extensively bombed.
The islands economy is dependent on its role as an administrative centre and is supported by pearling and fishing, as well as a fast-developing tourism industry, the most numerous visitors being day-trippers from the cruise ships that call into the island each year.