The Queensland government will change the name of Fraser Island back to K'gari, the name used by its traditional owners.
The Butchulla people on Sunday celebrated the name-change - which mean's 'paradise' - for the UNESCO World Heritage Area.
The Queensland Parks and Wildlife Service renamed the national park as K'gari (Fraser Island) in 2017.
Butchulla Aboriginal Corporation official Jade Gould said her people had been campaigning for years for the name to be changed back.
"The name Fraser Island is a tribute to Eliza Fraser - a woman whose narrative directly led to the massacre and dispossession of the Butchulla people," she said in a statement.
"A word meaning paradise in Butchulla language is a much more fitting name for such an iconic place."
Queensland Environment Minister Meaghan Scanlon says the government will soon begin talks with the Butchulla people and other stakeholders to formally rename the island.
She said the government has renamed a number of places already, including Naree Budjong Djara National Park on Minjerribah (North Stradbroke Island) and Gheebulum Kunungai National Park Mulgumpin (Moreton Island).
"The Palaszczuk government recognises Aboriginal and Torres Strait Island heritage and cultures, which represent an enduring and ongoing connection to Country for over 60,000 years," Ms Scanlon said.
The island's Kingfisher Bay Resort Group general manager David Hay said his company supported the Butchulla people's push for the name to revert.
"This change couldn't have come at a better time as we emerge from COVID and work to attract domestic and international travellers back to the region and the island," he said.
"There has never been a truer word spoken - K'gari really is paradise."
K'gari was originally known by Europeans as Great Sandy Island before it was changed to Fraser Island after Scotswoman Eliza Fraser was shipwrecked there in 1836.
Ms Fraser was eventually rescued by an escaped convict and taken back to Moreton Bay, now Brisbane.
She initially claimed she was mistreated by the local Indigenous people on the island, but changed her account a number of times.
Liberal National Party MP Jarrod Bleijie was against the name being changed back to K'gari.
"Have been going on holidays to Fraser Island all my life and will continue to go to FRASER ISLAND for the rest of it, despite what woke @AnnastaciaMP says," he tweeted.
Australian Associated Press