Nauruans (nearly 60% of the population) are predominantly Polynesian with a mix of Micronesian and Melanesian strains. There is a large Pacific Islander minority and smaller groups of Chinese and Europeans. Nearly all the inhabitants are Christians; two thirds are Protestant and one third are Roman Catholic. The official language is Nauruan, but English is commonly used in government and commerce.

Nauru was important for its high-grade phosphate deposits, now depleted, and more marginal deposits are now being mined. Nauru has few other resources and must import virtually all necessities, mostly from Australia. South Africa and South Korea are also important trading partners. The country placed much of its phosphate revenue in trust funds to ease the transition away from mining, but bad investments and corruption led to a serious depletion of the fund in the 1990s. In an attempt to generate income, Nauru became an unregulated offshore banking center, gaining notoriety for money laundering. It abandoned the industry in Mar., 2003, under the threat of crippling economic sanctions by the United States, which regarded Nauru banks as potential havens for terrorist financing. By mid-2004 Nauru faced bankruptcy, and the remaining assets of the trust, mostly Australian property, were seized to pay off its debts. In July, 2004, Australian officials took charge of the country's finances.

Nauru is governed under the constitution of 1968. The president, who is both head of state and head of government, is elected by the unicameral Parliament for a three-year term. The 18 members of Parliament are popularly elected, also for three-year terms. Administratively the country is divided into 14 districts.