Dr Kennedy said the new sign was about "letting the school know the history of this area".
Mrs Woon said she had wanted to make the change ever since taking charge at the school seven years ago.
She said it was "important to recognise the original owners of the land".
"Otonga Road School was named after the road on which it was located ... but the word 'Otonga' in itself had no real meaning in Maori. Today we acknowledge that the names of places have significance and that the name tells something of the location and history," she said.
More than 26 nationalities are represented by children at the school, and Mrs Woon said the school's logo could now have a dual meaning: the four winds of the Earth, and the four blocks of Maori land.
Olivia Dhanjee is on the school's board of trustees and has a child in Year 4. She said the day would have been a valuable experience for pupils at the school.
Ms Dhanjee thought it was right for the area's Maori history to be recognised.
"Rotorua is a bicultural city ... this area has a huge history, and it's nice for the community to know," she said.
"It's a really special occasion. It's quite emotional to see the sign up."