Captain Cook sailed past Rainbow Bay and the Gold Coast in 1770 at which time he named both Point Danger and Mount Warning. Their names reflected the apparent danger the area presented to ships navigating off the Gold Coast. A light house was later erected at Point Danger to warn ships of the potential hazards and it became the first lighthouse in the world to attempt to use laser technology to aid in navigation. Their efforts were unsuccessful and the advanced technology was replaced with the tried and proven conventional navigation aids involving the use of high powered lamps.
Captain Henry John Rous named Rainbow Bay in 1828 after his ship, the 28-gun frigate HMS Rainbow, while he was on commission to find suitable new fertile lands. He journeyed in a whale boat up the Tweed River and in the process he recaptured 9 escapees from the Moreton Bay Penal Settlement. A military outpost briefly existed after this on the headland at Point Danger. The outpost was created to intercept any other escapees from the Moreton Bay Penal Settlement.