The community was originally formed in the mid 1950's as a Catholic Mission. The remains of the Jesuit missions can be found on the western side of the river at Daly River Mango Farm and on Elizabeth Downs Station.

The traditional owners of the area are the Malak Malak people who live both in Nauiyu and at Wooliana downstream from the community. Other Aboriginal people began living in the area when it was first settled. Early settlers hoped to create a food bowl of the north on the Daly River. There were many attempts to grow peanuts, sugar cane, cashews and cereal crops which were all defeated by the regular rising of the river which floods the area during the wet season. By 1955, there was sufficient local population to warrant a school and a small hospital. The Nauiyu Community expanded from there.

The town is well served with a busy community supermarket, takeaway, social club, sports facilities including hall, swimming pool and oval, an airport, church, health centre, mechanical workshop and civil engineering section.

Local art is encouraged through the Merrepen Arts Centre where local artists are involved in painting, silk screen and other work. This is displayed in a newly constructed art gallery and is the theme for the Merrepen Arts Festival held annually.

Nauiyu & Wooliana are located approx 300km south west of Darwin and can be accessed without the use of a 4WD vehicle.