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Maafushi is one of the inhabited islands of Kaafu Atoll and the proposed capital for the Medhu Uthuru Province of the Maldives.

It was heavily damaged in the 2004 tsunami which impacted on over 100,000 of the Maldives 300,000 population. The International Federation of Red Cross and Red Crescent Societies, supported by the Irish and American Red Cross Socieites, began work on a mains sewage system on August 10, 2006. The International Federation has also funded the building of homes for those who lost theirs during the tsunami. Both schemes are carried out in partnership with commercial contractors and with the support and involvement of the local community.

Maafushi is one of the islands in Maldives with a thriving local economy. While more than sixty families benefit directly from fishing, tourism industry has taken a new turn since 2010. With the government regulation allowing opening of Guest Houses in local islands, Maafushi was the first to secure an investment in tourism accommodation. WhiteShell Beach Inn was opened in January 2010, making it the first Guest House to be granted license in a local island. Since then, many other guest houses have opened in Maafushi, and it has provided the local community with foreign currency inflows. Tourists from neighboring resort islands also visit Maafushi for island hopping and Maafushi provides them with shopping opportunity with souvenir shops at assigned areas of the island.
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