The airport bears the name of I Gusti Ngurah Rai, a Balinese military commander who became a national hero through the manner of his death. On 20 November 1946, during the Indonesian National Revolution, Ngurah Rai led his company in a puputan, a Balinese tradition of fighting to the death rather than surrendering. At Marga in Tabanan, the Dutch defeated his forces with air support, killing Ngurah Rai and 95 of his fighters. He was 29 years old. The puputan at Marga became a defining moment in Balinese resistance to colonial rule, and when the Indonesian government inaugurated the rebuilt international airport on 1 August 1968, President Suharto gave it the fallen commander's name. It is a rare airport whose namesake was killed by the same kind of military aircraft that would one day land on its runways.

By the 1960s, Bali wanted jet service. The Douglas DC-8 and Boeing 707 needed far more runway than the 1,200 meters the Japanese had left behind, but the fishing village of Tuban had grown to block any eastward expansion. The only option was to push the runway west, into the Indian Ocean. Between 1963 and 1969, workers quarried limestone from the cliffs at Ungasan and dredged sand from the Antosari-Tabanan river to reclaim enough seabed for a 1,500-meter extension, including two 100-meter overruns. The result was a 2,700-meter runway jutting into the water, an engineering answer to geography that defined the airport's character permanently. International air service was inaugurated on 10 August 1966, even before the terminal was finished. Today the runway stretches to accommodate aircraft up to the Airbus A380, and pilots approaching from the west fly over open ocean until the reclaimed threshold appears beneath them.

Bali's economy runs on tourism, and the airport is its single point of dependency. That vulnerability became painfully clear after the 2002 Kuta nightclub bombings, which killed 202 people and sent tourist arrivals into freefall. The airport and the island's economy suffered together. Recovery came slowly, but by 2018 Ngurah Rai was handling nearly 24 million passengers a year. A massive redevelopment added a new 120,000-square-meter international terminal in November 2013, timed to the APEC summit, and a renovated domestic terminal opened the following year. In 2016, Airports Council International ranked it the world's third-best airport in the 15-to-25-million passenger category. The terminals feature Balinese architectural themes, from carved stone gateways to a clock tower designed by sculptor Nyoman Nuarta. On 1 June 2023, an Emirates Airbus A380 touched down for the first scheduled A380 commercial service in Indonesia, requiring a purpose-built aerobridge to reach the superjumbo's upper deck.

Ngurah Rai occupies one of the most improbable settings in commercial aviation. The airport sits on a sliver of reclaimed coastline between the tourist districts of Kuta and Jimbaran, 13 kilometers from downtown Denpasar. Beachgoers at Kuta watch wide-body jets pass overhead at a few hundred feet, close enough to read the livery. About 500 private jets and charter aircraft land here every month, served by a dedicated general aviation apron at the airport's southern edge. A new VVIP terminal, inaugurated by President Joko Widodo on 9 November 2022 for the G20 Bali summit, handles visiting heads of state. With passenger growth running at 12 to 15 percent annually, the airport's current capacity is straining. A second airport site has been identified in northern Bali's Buleleng Regency, but for now, everything funnels through the runway that a confused demolition order preserved eight decades ago.