The airport was built in 1928 at a cost of $35,000 (equivalent to $656,250 in 2025). An aircraft hangar was built and expanded in the 1930s and the airport facilitated training and chartered flights.

In 1941, after the start of World War II, the airport served as a satellite of nearby McChord Field. Between July 1942 and August 1943, it was home to the 37th Flying Training Squadron (part of the 55th Pursuit Group) and their fleet of P-43 Lancers and P-38H Lightning interceptors. The airport returned to the City of Olympia in 1947.

The airport now supports large business jets, cargo aircraft, military helicopters and has a backup runway lighting system for uninterrupted operations. Olympia Airport also has an ILS (Instrument Landing System) and backup power system for operations during bad weather or low visibility. The Olympia VOR, located on the field, also provides instrument approaches into the Olympia Airport in low visibility conditions.

The FAA funded a $15 million improvement project that was completed in September 2008. The work focused on runway line-of-sight improvements and enhanced taxiway and runway signage. In the late 1990s, the airport's runway protection zone was extended with the purchase of $5.5 million worth of land on each end of the primary runway, and an above ground fuel facility was constructed.