The area was settled by sheepgraziers in the 1860s. By the 1870s the Nundroo sheep station had been incorporated in the larger Yalata and Fowlers Bay sheep runs. In the following decade these vast runs were broken up as the original pastoral leases expired, opening the area up to such activities as grain farming.
Nundroo is still largely agricultural, focusing on sheep grazing and grain farming. The Nundroo Hotel Motel was opened in 1957. The town serves as a rest-stop and as a gateway to coastal destinations like Fowlers Bay.
