Matakatia takes its name from a pā that once stood above the bay. The name has only been in common use since the 1940s, locals originally called it Tindalls Bay, after William Tindall who had his home here. The small offshore island, known to Māori as kota nui (big cockleshell), is today often called Sharkfin Island for its distinctive profile.

The Peninsula nearly reaches sea level at this point, with Waiau Bay to the north and Matakatia to the south - a natural crossing point where Māori portaged waka across the Peninsula long before Pākehā arrived.

One of the earliest European settlers was Frenchman Louis Direy, whose presence is reflected in one of Kotanui Island's names. Around 1927, the Hardley and de Luen families purchased land here to subdivide through their Capital Buildings Ltd. company - many local roads still bear their names.

Today Matakatia retains the charm of a classic mid-century bach community.