Formerly named West Molle Island, Daydream Island is one of the smallest islands within the Whitsunday Group. Daydream is the closest of the Whitsunday Islands to Shute Harbour, lying just five km from the mainland. Just one kilometre long, Daydream is popular with day visitors because of its close proximity to the mainland. Of its three beaches, one is fringed by outcrops of coral and colourful fish life. The island's dense jungle of tropical vegetation is inhabited by parrots and tiny sunbirds. The highest point on the island is 51 metres above sea level.
Daydream Island is a mecca for sailing enthusiasts. It has an outdoor aquarium, with sea life from the Great Barrier Reef. The aquarium has about 80 different types of sea life and about 50 different corals. Wallabies roam around outside the resort by the beach. It is a short ferry ride from Great Barrier Reef airport on Hamilton Island to Daydream Island, and also just minutes away by boat to Airlie Beach. Activities like snorkeling, sail-boarding, jet-skiing, parasailing, coral viewing, scuba diving, volleyball, tennis, and badminton are popular.
Christened West Molle Island in 1881, the present name "Daydream" came into use in 1932 when Lee (Paddy) and Connie Murray established the first tourist resort on the island. They re-named the island 'Day Dream' after a yacht owned by the Murray family.
Ownership of the resort passed through a number of individuals or groups. Among them was Reg Ansett, who closed and dismantled the resort in 1953 and shipped the buildings to Hayman Island. A new resort was developed in 1968, but was almost totally destroyed in a cyclone two years later. It entered a period of major redevelopment in 1981 after years of unprofitability but was again closed down in 1989.
Daydream Island has commenced its demolition and construction program ahead of its long-awaited redevelopment expected to be completed in August 2018. Following the damage caused in March by Cyclone Debbie, Daydream Island has invested $86 million in the redevelopment of the island. On Monday 27 November 2017, construction officially began with Architecture firm, Hunt Design, leading the redesign of the island's resort accommodation and venues.