The Rakaia River was known to the Maori people as O Rakaia which means 'the place where people were ranged in rank'. At the mouth of the river many Maori earth ovens have been discovered which were used for cooking Moa. Over 1000 oven sites have been recorded in this area which indicates large scale specialized moa-hunting for food supplies was carried out here.

The Rakaia River runs 145 kilometers from the Lyell and Ramsay Glaciers to the sea. The main tributaries are the Wilberforce and the Mathia.

William Dunford is said to be the founder of Rakaia township. He arrived at the North Bank of the river in 1856 and shortly afterwards began guiding travelers across the river by punt. In 1863 Cobb and Co also located themselves on the North Bank with Dunford, but in 1864 moved to the South Bank where they built stables and established their base. With the success of Cobb and Co Coach lines and the ever increasing number of people basing themselves on the South Bank of the Rakaia River, the settlement began to grow. The first accommodation house was built on the South side of the river about 150 years ago after a fire destroyed the Hotel on the North bank. The South Rakaia Hotel is still operating today.

An Englishman, William White submitted a design for a road/rail bridge in 1868 which he offered to complete for 34,500 Pounds. The tender was let later that year and took five years to complete, this meaning, the first bridge across the Rakaia River opened in 1873. The present road bridge was opened in 1938 and spans 1.8 kilometers over one of the world's best examples of a 'braided' river. When constructed it was the longest bridge in the Southern Hemisphere.

17 Kilometers North West of Rakaia is the settlement of Barhill. This was an attempt in the 1870's by a Scotsman, John Cathcart Wason to transplant English village life to Canterbury . He was farming 80000ha along the South bank of The Rakaia River; however his attempt lasted little more than 20 years and was eventually thwarted by economic pressures which forced subdivision of larger holdings. He named this village Barhill, after a favorite place in Scotland. The Barhill village is still standing and the church hosts many weddings and can still be visited today.

Rakaia is renowned for its fertile, alluvial soil, either washed or blown down the plains. Horticulture and arable farming enjoy ideal conditions, and sheep, deer (and more recently) a number of dairy farms are established throughout the area. A rural servicing town, Rakaia has a growing industrial and commercial base with innovative firms specializing in agricultural and marine products.