The bay has been a haven for sea vessels because of its natural deepwater harbour, protected by the Pelican Point sand spit. Being rich in plankton and marine life, these waters drew large numbers of whales attracting whalers and fishing vessels. The Dutch referred to it as Walvisch Baye and the English as Whale Bay, and in its eventual proclamation it came to be called Walfish Bay, and eventually Walvis Bay. A succession of colonists developed the location and resources of this strategic harbour settlement. The harbour's value in relation to the sea route around the Cape of Good Hope had caught the attention of world powers since it was discovered. This explains the complicated political status of Walvis Bay down the years.
Walvis Bay, with its large bay and sand dunes, is the tourism activity centre of Namibia. Other attractions include the artificial Bird Island, centre of a guano collection industry, the Dune 7 sand dune, salt works, birdlife and a museum. Kuisebmund Stadium, home to two clubs in the Namibia Premier League, is also located in the city.
The Portuguese navigator Bartolomeu Dias anchored his flagship São Cristóvão in Walvis Bay on 8 December 1487, on his expedition to discover a sea route to the East via the Cape of Good Hope. He named the bay "O Golfo de Santa Maria da Conceição." However, the Portuguese did not formally stake a claim to Walvis Bay.
Little commercial development occurred in the city until 1840, when in the scramble for Africa, Britain, the dominant seafaring nation at the time, annexed Walvis Bay and a small area surrounding the territory in 1878 as part of Cape Colony both to forestall German ambitions in the region and to ensure safe passage of British ships around the Cape. In 1910, Walvis Bay, as well as the Cape Colony, became part of the newly formed Union of South Africa. However, a dispute arose with Germany over the enclave's boundaries. This was eventually settled in 1911 and Walvis Bay was allocated an area of .
The enclave was overrun by the Germans during the South-West Africa Campaign early in World War I. But South African Forces eventually ousted the Germans in 1915 and Walvis Bay was quickly integrated into the new martial law regime established in South-West Africa. South Africa was later awarded control (a "C" class mandate) over South-West Africa by the League of Nations to administer SWA as an integral part of South Africa. Civilian rule was restored in South-West Africa in 1921 and administration of Walvis Bay was transferred to SWA by Act of the South African parliament in 1922.
In 1971, anticipating an imminent ceding of its control over South-West Africa, South Africa transferred control of Walvis Bay back to its Cape Province. In 1977, in an attempt to avoid losing control of Walvis Bay to a possibly hostile SWAPO-led government, the South African government reimposed direct rule and reasserted its claim of sovereignty based on the original annexation. In 1978, the United Nations Security Council provided for bilateral negotiations between South Africa and a future Namibia to resolve the political status of Walvis Bay.
In 1990, South-West Africa gained independence as Namibia, but Walvis Bay remained under South African sovereignty. It was not until midnight on 28 February 1994 that sovereignty over Walvis Bay was formally transferred to Namibia.