During the Void Century, a war on Shandora was fought here by the Twenty Kingdoms who were seeking the stone. After the Void Century, the island became largely forgotten by the World Government. The few sailors that would land on the island would either be chased away or get killed by the native Jayans.
The island was ruled by the Shandia four hundred years ago, who guarded the Poneglyph located in their city of gold, until they were launched into the sky.
In present day, however, the island is mostly uninhabited other than one town. The island is a major base for pirates, one of which is Mock Town. This is the location of the Jaya Arc. For more information, see Upper Yard.
The island of Jaya before it was divided up by a Knock-Up Stream.
Merged maps of Skypiea and modern Jaya to show its original skull shape.
The name of the island may be a reference to the real-life Indonesian island of Java, or probably the Island of Papua (Papua was named Irian Jaya before it changed back into Papua in 2003). The Island of Papua has the shape of a bird's head. It should also be noted that the name could be derived from the Sanskrit word "Jayakarta" meaning "victorious deed", which interestingly enough is also the origin of the name of Indonesia's capital city Jakarta.
Jaya means "Victory" and "Glory" in Sanskrit and Malay.
Islands shaped like skulls are fairly common in fiction involving pirates.