Following the Six Day War, the town was occupied by Israel and was known in Hebrew as Di-Zahav named after a place mentioned in the Bible as one of the stations for the Israelites during the Exodus from Egypt.  The Sinai Peninsula was restored to Egyptian rule in the Israel-Egypt Peace Treaty in 1982. The arrival of international hotel chains and the establishment of other ancillary facilities has since made the town a popular destination with tourists. Dahab is served by Sharm el-Sheikh International Airport. Masbat (within Dahab) is a popular diving destination, and there are many (50+) dive centers located within Dahab.

Historically, most visitors to Dahab have been backpackers travelling independently and staying in hostels, motels or guesthouses in the Masbat area. In recent years, development of hotels in the Medina area has facilitated the arrival of a wider range of tourists, many of whom visit Dahab specifically to partake in the surfing, windsurfing, diving, kite surfing, sailing, and other activities.  Much of the coral in the reefs just offshore is slowly disappearing, due to inexperienced divers being taken out in big numbers. Another big problem is that in Masbat local restaurants are dumping sand and rock into the sea to extend the shoreline, again causing disruption to local coral reefs.  Local Bedouin children, sometimes encouraged by their families, come to beach cafes and restaurants to sell items such as woven bracelets to tourists. The influx of female tourists on the beach, who typically dress in a more revealing fashion, introduces a culture unfamiliar to the region.

The word Dahab is Egyptian Arabic for gold and is possibly a reference to the geographic locality; gold washed down from the desert mountains may have accumulated on the alluvial flood plain where the town was built. The name may also be a reference to the colour of the sands to the south of the town itself. Some locals attribute the name to the colour of the sky just after sunset. Dahab has a hot desert climate  as the rest of Egypt. Weather on summer days is very hot and also quite hot at night. Winter days are warm and nights are mild. Dahab has a very dry climate and rain is rare, even during the winter months. The precipitation peaks in February .