The history of Te Anau is rooted in the era before European colonization. Indigenous Māori, particularly the Ngāi Tahu tribe, used this area as an important seasonal site during expeditions for pounamu (greenstone) and for gathering food resources. The town's name comes from the Māori "Te Ana-au," which translates to "the cave of rushing water," referring to the legends of the caves on the western shore of the lake.
European explorers first reached the shores of the lake in 1852. Official planning for the town began much later: surveyors marked out the territory for the future settlement in 1893, when the region's potential became evident. The transformation of this remote area into a township was driven by its advantageous geographical location on the shore of the South Island's largest lake, which made Te Anau a natural transport hub and a gateway to the rugged Fiordland region.
Agriculture played a vital role in the establishment of the settlement: in the mid-19th century, the vast plains around the lake attracted farmers who founded large sheep stations here. A turning point came in 1888 when Quintin McKinnon discovered a pass to Milford Sound, linking the town with the Tasman Sea coast and opening new communication routes.
In the late 19th and early 20th centuries, the economy and culture of Te Anau were shaped at the intersection of a rugged farming lifestyle and emerging tourism. Due to its distance from major centers, early settlers relied on their own resources, developing a culture of mutual aid. At the same time, following the opening of the Milford Track, the first hotels and guiding services began to appear in the town, laying a solid foundation for its modern specialization as a world-class tourism center.