Anthropological, linguistic and genetic research has suggested that the Massim islands of south-east New Guinea have a complex human history. Archaeological research has gone some way to model the long-term trajectories of island settlement in this region. However, the role of inter-island interaction and connections with mainland populations in shaping cultural diversity remains poorly understood, particularly as it relates to the formative development of the ethnographically described Kula network within which Panaeati Island (Louisiade Archipelago) was once a central node. Excavations at the Mumwa site on Panaeati Island have revealed a mid-Holocene cultural deposit (4350 cal. BP), with overlying pottery-bearing layers (750-500 cal. BP) spanning a period of profound social change across the Massim and south Papuan coast, during which time Kula is thought to have commenced in earnest. Our data suggests that more regular human habitation of the Massim islands from the end of the mid-Holocene coincided with similarly timed population expansions and changes in tool technologies in other parts of New Guinea that influenced subsequent population dispersals, and likely contributed to the diversification of regional cultural identities. Within the last millennium, inter-island connections had been established with population on Woodlark and perhaps along the south Papuan coast, facilitating the spread of shared cultural behaviours that overlaid established local practices. The gradual withdrawal of islands in the Louisiade Archipelago from regular involvement in regional maritime networks over the last 500 years contributed to deepening linguistic, genetic and cultural boundaries, and were thereafter on the periphery of the Kula network.