When the Sinai Peninsula was returned to Egypt, Ras Muhammad was declared for protection from fishing and other human activities. Some of the fishing methods, such as using dynamite and knives also were impacting the coral reef and the fish populations. In 1983, the Egyptian Environmental Affairs Agency (EEAA) established the area as a marine reserve for the protection of marine and terrestrial wildlife. The park was also established to protect against urban sprawl from Sharm el-Sheikh and other coastal development. The name literally means "Mohammad's Head", where "head" in this instance means "headland". There is a saying in the area that the name arose because in side view the contour of the cliff looks like the profile of a bearded man's face, with horizontal hard strata providing the nose and bearded chin.

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