At the beginning of it's history, the Australian aboriginal flag was flown on flag poles in a sense of protest about the encroachment on the lands of indigenous Australians by the Caucasians who were in control of the country. The flag originated in the mind of Harold Thomas, an Aboriginal artist, in 1971. Prior to the creation of the new flag, the Aborigines had staged a series of protests for their ancestral land rights. Marches, demonstrations, and standing protests were common, and the people felt they needed a visible icon, especially since they were frequently outnumbered by non-Aboriginal protesters with their own signs and posters. These protests are what inspired Thomas to create the banner.

Like the (American flag) and other national emblems, the Aboriginal flag's design is symbolic. The flag features two bold stripes, a black one on the top and a red one on the bottom. Thomas put the black color on top in order to create a slightly unsettling look and draw attention to the flag. Some believe the black color represents the aboriginal people. The red is representative of the red earth of their native lands. The yellow circle in the center represents the sun, which the aborigines believe to be the renewer of life. Thomas also said he chose red and yellow because they were the colors of ochre used by the native people in their cultural ceremonies.

July 12, 1971 was the first time the flag was flown. It made its appearance in Victoria Square on National Aborigines' Day. Late in 1972 it was flown at the Aboriginal Tent Embassy in Canberra. After these first official displays, it was flown at a variety of Aboriginal festivals and functions, and quickly became the icon of Australia's native people.

In 1994 Australia hosted the Commonwealth Games, and winning sprinter Cathy Freeman caused great controversy by waving the Aboriginal flag alongside the Australian national flag during her victory lap. This was controversial because only the national flag was supposed to be flown at this event. However, this action brought attention to the desire of some Aboriginals for their flag to be considered a national flag, and soon after the games, Prime Minister Paul Keating put legislation in place to make it so.

Liberal politicians opposed this action, stating that doing so would actually be divisive instead of unifying, because it would draw attention to the two separate people groups. However, the flag became an official flag of the country in 1995, and liberal leader John Howard made no attempt to change the legislation when he came into office in 1996. The flag's creator opposed this action, stating that the flag "doesn't need any more recognition."

Regardless of the opposition, today the Aboriginal flag is one of the national flags of Australia. As a result, it has become a symbol of the pride and history of the native people. It has also helped to unify the country, breaking some of the dividing line between natives and Caucasians and becoming a symbol of reconciliation between the two groups. Today, Aboriginals and non-Aboriginals alike proudly display this flag as a symbol of the native people and the country's rich and diverse history.