The settlement was previously known as Norman Mouth and Kimberley. The toponym derives from the Kareldi native name, Kurumba, who were the indigenous landholders of this area before the onset of white colonization and expropriation. This name was officially used for the township by the 1880s. Karumba Post Office opened on 22 August 1889 and closed in 1919. Given its access to the Gulf of Carpentaria, the town's economy has revolved largely around fishing. The prawn industry expanded in the 1960s. In the late 1930s the town was a refueling and maintenance stop for the flying boats of the Qantas Empire Airways. No. 43 Squadron of the RAAF also operated Consolidated PBY Catalina flying boats from the town between June 1943 and April 1944. Karumba State School opened in September 1968. Karumba Public Library was opened in 1979. The region is repeatedly mentioned in the song "Every Passing Day" by Australian band Goanna on their album Oceania. At the 2006 census, Karumba had a population of 518. The Red Hot Chili Peppers' song "Animal Bar" from their 2006 album Stadium Arcadium is about Karumba. It is named after a bar called the Animal Bar.
Karumba has a public library in Walker Street, visitor information centre, parks, bowls club, golf course, swimming pool, and a sports centre. The Carpentaria Shire Council operates a public library at Walker Street.
Climate
Karumba has a tropical savanna climate with two distinct seasons. The “Wet” usually lasts from December to March and is extremely hot and humid, with wet bulb temperatures typically above during the afternoons. Most roads during the “Wet” are usually closed by heavy rain, which can exceed in a day due to the passage of tropical cyclones or monsoonal depressions which provide most of the rain. On occasions, however, as with all of Queensland the wet season may fail almost completely and produce less than in a full season. The “Dry” usually lasts from April to the middle of November and is much more comfortable due to lower humidity and milder morning temperatures. This period of the year is essentially bone dry and almost completely cloudless: median rainfall is nil between May and September and over twenty days each month are completely clear.