Rabaul was the headquarters of German New Guinea until captured by the British Commonwealth during World War I, when it became the capital of the Australian mandated Territory of New Guinea until 1937. During World War II it was captured by the Japanese in 1942, and it became the main base of Japanese military and naval activity in the South Pacific. Settlements and military installations around the edge of the caldera are often collectively referred to as Rabaul despite the old town of Rabaul itself being reduced to practical insignificance by the volcanic eruption in 1994.
As a tourist destination, Rabaul is popular for SCUBA diving and for snorkelling sites and a spectacular harbour; it had been the premier commercial and travel destination in Papua New Guinea and indeed in the wider South Pacific during much of the 20th century until the 1994 volcanic eruptions. There are still several diving operators based there.
At the outset of World War I, at the behest of Great Britain, Australia occupied German New Guinea with the volunteer Australian Naval and Military Expeditionary Force. Following Germany's defeat at the end of the war, the occupied territory was delegated in 1920 to Australia as a League of Nations Mandate (Class C). Rabaul became the capital of the Territory of New Guinea.
Following this, the Australian administration for the Territory of New Guinea decided to move the territorial headquarters to the safer location of Lae. Any long-term steps to re-establish the territorial headquarters at Rabaul were forestalled with the beginning of the World War II
The Australian administration had determined not to re-establish the territorial headquarters at Rabaul form the long term. World War II, however, intervened before further concrete steps could be taken.
After the Japanese attacked Pearl Harbor it was apparent that Rabaul would come under attack. By December 1941, all women and children were evacuated. In January 1942, Rabaul was heavily bombed, and on January 23 the Battle of Rabaul began with the landing of thousands of Japanese marines.
During their occupation the Japanese developed Rabaul into a much more powerful base than the Australians had planned after the 1937 volcanic eruptions, with long term consequences for the town in the post-War period. The Japanese army dug many kilometres of tunnels as shelter from the Allied air forces. By 1943 there were about 110,000 Japanese troops based in Rabaul. The Japanese army also set up brothels in Rabaul where "... perhaps 2000 or more women were deceived and forced into prostitution of a most demanding kind ...", according to Emeritus Professor Hank Nelson from the Australian National University's Research School of Pacific and Asian Studies.
On April 18 1943, Admiral Isoroku Yamamoto, the architect of the Japanese attack on Pearl Harbor, was shot down and killed by United States aircraft over South Bougainville after taking off from Rabaul. Japanese communications giving Yamamoto's flight itinerary were decrypted by United States Navy cryptographers. Eighteen United States Army Air Force P-38 Lightning fighters took off from Guadalcanal and destroyed the two bombers of the Yamamoto flight and the escorting Japanese fighters.
Instead of capturing Rabaul, the Allied forces bypassed it by establishing a ring of airfields and naval bases on the islands around it. Cut off from re-supply and under continual air attacks as part of Operation Cartwheel, the base became useless. The Japanese held Rabaul until they surrendered at the end of the war in August 1945.
In 1983 and 1984 the town was ready for evacuation when the volcanoes started to heat up. Nothing happened until 19 September 1994, when again Tavurvur and Vulcan erupted, destroying the airport and covering most of the town with heavy ashfall. There was only 19 hours of warning before the eruption and the city's inhabitants self-evacuated before the eruption. Only a handful of people were killed - several of them by lightning from the eruptive column. The advance planning and evacuation drills helped keep the death toll low. Most of the buildings in the southeastern half of Rabaul collapsed due to the weight of ash on their roofs.
The last eruption prompted the relocation of the provincial capital to Kokopo, the former German Herbertshöhe. Nonetheless, Rabaul is slowing rebuilding in the danger zone. Vulcan has remained dormant since the eruption, while small-scale eruptions from Tavurvur occur intermittently. A government volcano observatory is maintained in the northern portion of Rabaul. It also has responsibility for monitoring the other volcanoes on New Britain and nearby islands in addition to the Rabaul caldera.
Rabaul has a large, nearly-perfect circular harbor, Simpson Harbor, one of the best in the South Pacific region for shipping. Use of this harbor for the Imperial Japanese Navy was one of the motivations for the Japanese invasion in 1942.