The oblast was created in 1930 as the part of Soviet policy of national delimitation. By 1926, Koreans represented more than a quarter of the rural population of the Primorsky Krai. Soviet official policy toward national minorities demanded the formation of a Korean autonomous territory for the large Korean community in the Soviet Far East. The option for establishing a Korean national territory in the Soviet Far East was seriously debated in Moscow before it was finally adopted in 1928.
The first state-sponsored Korean settlements were established in Ayan, a little port on the bay of the Sea of Okhotsk in 1928. The Soviet policy of korenizatsiya (indigenization) resulted in the creation of 39 Korean village soviets at the area of Ayan. By decree of the Soviet government, the Ayan Korean Autonomous Oblast was officially formed on December 10, 1930 by combining the areas of Ayan and Nelkan
In the 1930s, the Soviet government began forming state and collective farms and opened local Korean-language schools and hospitals intended for local Korean settlers. Ayan was become the centre of many East Asian communist parties or similar revolutionary movements activities as well as the prominent economic and cultural centre on the Soviet Far East between 1930s and 1940s. After Japan established the extensive trade relationship with the Soviet Union in 1934, Ayan became one of important ports in the Soviet Far East and while the Koreans grew significantly as a majority in Ayan, other ethnicities such as the Japanese and the Chinese also began to reside in Ayan.