European traders, adventurers and gold explorers from various countries visited the area during the 17th and 18th centuries, but no territorial claims were made until 1828 when the Dutch took control of the western half of New Guinea (now Irian Jaya or West Papua which was ceded to Indonesia in 1962). British and German colonists and settlers followed, but due to the rugged terrain and isolated village communities, the impact of colonisation was varied through the region.

Prior to the First World War PNG consisted of two separate colonial territories. The territory of Papua was a British colony from 1884 and was later ceded to Australia to administer. New Guinea was part of the German Empire until the First World War when it was occupied by Australian forces in 1914. The territory was given to Australia to administer after the end of the War as part of Treaty of Versailles.

During the Second World War Japanese forces occupied large parts of PNG from 1942 onwards. There was fierce fighting along the Kokoda Trail over the Owen Stanley Ranges as the Japanese sought unsuccessfully to capture Port Moresby. After the end of the War in 1945 the two territories were formally amalgamated into the Territory of Papua New Guinea (TPNG).

The Australian administration focused its efforts on developing the cash economy of TPNG through investment in agriculture and mining and the democratisation of the central government. The Papua and New Guinea Act of 1949 provided for a Leglislative Council, a judicial system, a civil service and a local government system. In 1964 the first House of Assembly was established to provide Papua New Guineans with a greater role in the country's decision-making process. Preparations for political independence began in the late 1960s. In 1972 Michael Somare became Chief Minister of a democratically elected government and in 1973 the country was unified administratively and renamed Papua New Guinea. PNG became fully independent on September 16, 1975.