Health literacy is strongly associated with health outcomes and is important for health policy and service delivery. Low health literacy was reported in 59% of Australian adults, however, there is no national data on the health literacy of Aboriginal and Torres Strait Islander (ATSI) peoples. The ATSI population in Australia experience a notable gap in health outcomes compared with non-Indigenous Australians which is due, in part to a higher prevalence of chronic diseases. The health outcome gap is more pronounced in rural and remote locations. This study aims to establish the health literacy profile of ATSI adults with chronic disease living in remote North-West Queensland Australia, and to investigate associations between the Health Literacy Questionnaire (HLQ) domains and self-reported chronic disease and demographic characteristics. Using a cross-sectional design, 200 ATSI adults with a diagnosis of chronic disease/s (cardiovascular disease, diabetes, respiratory disease and/or chronic kidney disease) were recruited from two sites with the assistance of Aboriginal Health Workers. Data were collected using the HLQ, a multidimensional 44 item instrument to assess nine domains of health literacy. Demographic and health data were also collected. Analysis of variance using backwards modelling was used to determine predictors of health literacy. Participants were mostly male (53.5%) and aged between 19 and 89 years. The most prevalent chronic disease was cardiovascular disease (74%) followed by diabetes (67.5%). More than half (62%) had two or more chronic diseases. There was at least one independent predicator for each of the nine health literacy domains. Age, number of chronic diseases, gender, and level of education were all highly significant predictors of health literacy. Improved health literacy will enable individuals to take an active role in their health. Understanding the health literacy of ATSI adults is a crucial first step. Our findings can assist Australian healthcare organisations to review their health literacy responsiveness and examine ways to improve patients’ needs and health capabilities to better support people to engage in effective self-management for chronic diseases.