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.
These days there are two tourist resorts operating on the island: the original resort at the southern end caters to day visitors, only overnight guests can visit the newer resort (opened in 1990) at the north-eastern end of the island. On the 25 January 2017 Daydream Island announced a $50 million dollar renovation. The island will close in February 2018 with the Fish Bowl, Bake House and Shops on the southern end closing in February 2017 for renovations to the lagoon outside the Fish Bowl.