On 28 July 1954, the catchment areas of Lake Waikaremoana, Lake Waikareiti and other Crown reserves were gazetted as a national park, and by 1957 proposals were well underway to add the rest of the Crown land in Te Urewera north of Ruatahuna. This proposal was formalised in November 1957 when an additional 1,350 km² were added. Further additions were made in 1962, 1975 and 1979, with smaller acquisitions and boundary alterations in the intervening period.
Te Urewera is the traditional home of the Tuhoe people. Due to its geographical isolation, it was one of the last regions to come under control of the British during colonization in the 1800s. Te Kooti, the Māori leader, found refuge there from his pursuers among Tuhoe, with whom he formed an alliance.
The park's name comes from the Māori words ure meaning penis and wera meaning burnt, so it means "burnt penis" in Māori. The name comes from the tale of a Māori chief who died after rolling over in his sleep while lying too close to a camp fire.