The site was set up as a horse-drawn camp at the nearby Kynuna Farm, where five streets on the Diamantina River met. Kyuna was named a city in 1894 and shortly afterwards was inhabited by 700 people and had three pubs.
According to a local legend, the sheep shearer Samuel Hoffmeister committed suicide at the Combo Waterhole near Kynuna in 1894. This inspired Banjo Paterson to write Waltzing Matilda . Paterson was engaged to the daughter of a local farmer for a while and toured the area.
Today the place has a pub and a hotel.
South of Kynuna is Australia's northernmost opal field .