Taiya Inlet received its name in 1868. Taiya was derived from the Tlingit term tayee, which means beneath or underneath. It was also called Dayday Inlet and Dejah Inlet but the latter two names fell out of favor. Taiya Inlet was an important waterway during the Klondike Gold Rush offering passage to the deep-water port of Skagway and, by smaller boat, the now-ghost town of Dyea. These two boom towns were gateways to the respective White Pass and Chilkoottrails.
Currently Taiya Inlet is used for marine transportation and recreation such as fishing. The Taiya Inlet Watershed Council is also dedicating to its preservation.