Yam Island sits at a cultural intersection that has shaped the Torres Strait for millennia. According to Mabuiag-Badu oral traditions, Austronesian people from far-eastern Papua settled first at Parema in the Fly Delta, married local Trans-Fly women from the Gizra, Wipi, Bine, and Meriam peoples, then moved south to Yam Island perhaps 2,800 years ago. From Yam they spread westward to Moa and Mabuiag, eastward to the Central and Eastern Islands. The resulting culture blended Austronesian, Papuan, and Aboriginal Australian elements into something entirely new. The Western-Central language, Kulkalgau Ya, carries the imprint of all three worlds: a Paman (Australian) base layered with Austronesian and Papuan vocabulary.

Papuan legend holds that Yam Islanders were the first to settle the mud island near the mouth of a river south of the Fly Delta, giving it the name Dhaaru in their language. That settlement became Daru, today the capital of Papua New Guinea's Western Province. The Yama had long-established trading and family ties with the Trans-Fly Papuans, but when the Kiwai people began raiding and conquering coastal territory, the community fractured. Some fled to the Trans-Fly mainland. Others crossed to Saibai, Boigu, and Dauan. But the majority chose to preserve their tribal identity by putting maximum distance between themselves and the Kiwai, relocating all the way south to Moa, Muri, and the Muralag group. They became the Kaurareg, the people whose modern name means simply 'Islanders,' and their kinship with the Kulkalgal of Yam remains strong.

The London Missionary Society established a station at Yam's western end, and the village that grew around it became the island's permanent settlement. Many men worked the pearling luggers that drove the Torres Strait economy in the late 1800s, with stations operating on nearby Tudu and Nagi. Pacific Islanders from the Nagi station eventually settled on Yam, weaving another thread into the island's already complex cultural fabric. During World War II, Yam men enlisted in C Company of the Torres Strait Light Infantry Battalion, defending their home waters alongside other Islander soldiers. Despite this seafaring heritage, the island remained remarkably isolated. An airstrip did not arrive until 1974, and the telephone exchange connection came only in 1980.

In the 1950s, researcher Margaret Lawrie began visiting the Torres Strait, spending months at a time among Islander communities. On Yam and elsewhere, people approached her to record their stories and family histories before they were lost. Over two decades she collected transcripts, audio recordings, photographs, art, and oral traditions that became the books Myths and Legends of Torres Strait and Tales from Torres Strait. In 2008 her collection was inscribed on UNESCO's Memory of the World Register. Today, the Dawita Cultural Centre on Church Road houses an Indigenous Knowledge Centre where the community works to revive and share their culture through language, art, song, and dance. The island has also produced notable leaders: Getano Lui Senior and his son Getano Lui Junior both served as chairman of the Island Coordinating Council, carrying forward a tradition of leadership that reaches back to Maino Kebisu, statesman and storyteller.