Pre-European settlement Kaeo used to be a fortified village
pā of the Ngati Uru sub-tribe. This tribe arrived in the
Whangaroa Harbour as late as 1770–1775, having been driven out of the
Rawhiti area of the
Bay of Islands, after killing and eating Captain
Marion du Fresne and his crew.
European settlement Wesleydale, the first
Wesleyan Methodist mission in New Zealand, was established by
Samuel Leigh and
William White at Kaeo in June 1823, then abandoned in January 1827 after it was sacked by local Māori. A memorial cairn marks the site of the mission adjacent to the cemetery on the south side of the
Kaeo River.
Flooding Kaeo is built on the flood plain of the Kaeo River and has experienced destructive flooding. It came to national attention in 2007 when it took the brunt of three major floods within the space of a few months - in February, March and July. Water flooded homes and shops and destroyed the primary school's pool complex. The local rugby clubrooms also suffered, and the club received support from the whole country as it raised funds to lift the clubrooms off the ground to minimise the risk of damage from further flooding. Landslips, fallen power lines, and road closures resulted from heavy rain in February 2008. The
Northland Regional Council scheduled flood-protection work for 2008, but in 2011 was still waiting on various consents. Floods occurred as a result of
Cyclone Wilma in January 2011, and 70 people had to be evacuated from Kaeo. In November 2025, the national water regulator
Taumata Arowai took over Kāeo's drinking water supply from private contractor, Wai Care Environmental Consultants, and ordered the
Far North District Council to operate it. The town had been under a boil water notice for the past ten years and lacked running water. ==Notable buildings==