The airport was built up from an old airstrip that was first laid down in the 1920s. In addition to serving airline traffic, the airport is also the only public general aviation facility within the Australian Capital Territory; and supports government VIP flying operations. The General Aviation Terminal in Canberra Airport is a small separate building located on the far west side of the Terminal Precinct.

As early as the 1920s, aviators had used fields in the Albion Park area for pleasure flights and demonstrations. Queen Elizabeth II and Prince Philip, Duke of Edinburgh visited the airport during a 1970 tour of Australia. There is no control tower located at the airport and pilots must co-ordinate arrivals and departures using a Common Traffic Advisory Frequency.

The airport was officially opened on 12 December 1931, by the Minister for Trade and Customs, the Hon. Frank Forde, M.H.R., as a civilian airport. With the outbreak of World War II, it was decided as part of the Empire Air Training Scheme to requisition Bundaberg Airport and develop it as a Royal Australian Air Force (RAAF) Flying Training School. The Department of Civil Aviation took over Bundaberg Aerodrome on 31 July 1946. Bundaberg City Council took over the airport in June 1983.