Derby was famous in the 1920s as the terminus of the first scheduled aviation service in Australia, West Australian Airways Ltd. Their service began with their first flight on 5 December 1921, which crashed, near Geraldton. At one time the Perth to Derby service was the world's longest passenger airline route.
In 1968 the town had a population of approximately 1,500 people, many employed at the meatworks. A A$900,000 beef road from Glenroy Station to Derby was completed the same year to assist with the development of beef processing. A A$2 million steel and concrete jetty was built in 1965 to provide adequate port facilities for the shipment of live cattle. The West Kimberley Regional Prison, whose architecture won several awards, was opened in 2012.
Local boy Jimmy Taylor disappeared from Derby on 29 August 1974 after walking to a local shop. In 2014, a coroner determined that he had died, but was unable to determine when or how, recording an open verdict. Convicted child killer James Ryan O'Neill was living in Derby at the time of Taylor's disappearance but he has denied any involvement. In 2023, a $1 million reward was offered to anyone who provided information as to what had happened to Taylor.
According to the 2016 census of population, there were 3,325 people in Derby.
Aboriginal and Torres Strait Islander people made up 47.2% of the population.
77.4% of people were born in Australia. The next most common country of birth was New Zealand at 3.4%.
72.5% of people spoke only English at home. Other languages spoken at home included Kriol at 6.2%.
The most common responses for religion were No Religion 27.7% and Catholic 26.8%.
Derby has two schools located in the town, Holy Rosary School Derby and Derby District High School. Derby District High School follows Chris Sarra's vision of "Stronger Smarter", which aims to raise the expectations of the school as a community.
Wharfinger's House Museum tells the story of the aviation history of the town as well as the history of the port. The Norval Gallery showcases the work of artist Mark Norval as well as a broad selection of Indigenous artwork from across the Kimberley.
There is employment in the pastoral and mining industries, as well as administration and tourism. There is oil at Blina, diamond mining at Ellendale. Granite is quarried from the Wunaamin-Miliwundi Ranges and lead and zinc from Cadjebut and an iron ore mine at Koolan Island. A major mineral sands mining project is being developed at Thunderbird, 100 kilometres (62 mi) west of Derby. In 1997 the Derby wharf, which was closed in the 1980s, was re-opened for barging operations for the export of lead and zinc.
Tourism bolsters the local economy between the months of May and September.
The Derby Leprosarium on the outskirts of the town was one of two in Western Australia that helped to contain an epidemic of leprosy from the 1930s to the 1960s.
Derby has a hot semi-arid climate (KöppenBSh), with a short, highly variable wet season lasting from late December to March. The wet season features hot, humid days and nights and erratic downpours. In some years there may be no wet season at all, as occurred in 1923–24 and in 1951–52, but in other years, such as 1999–2000, more than the average annual rainfall has fallen in a month. Derby can be affected by severe tropical cyclones. The dry season lasts from April to November and features very little rain, warm to hot daytime temperatures, and mild to cool nights. Extremes of temperature range from 47.8 °C (118.0 °F) on 17 November 1968 to 5.0 °C (41.0 °F) on 21 July 1965, while the wettest month on record was January 1917, when 803.6 millimetres (31.64 in) of rain fell, including the wettest day, 7 January 1917, when 418.3 millimetres (16.47 in) was recorded.