An area near Cobar in New South Wales's far west will today be handed to the Aboriginal community, just the second such handover of land to traditional owners in the state.

Ownership of the Mount Grenfell historic site, which has been a national park, is to be signed over to the Ngiyampaa people.

It will be managed by a board dominated by Aboriginal people and leased back to the parks department.

Elder Elaine Ohlsen says the area is significant especially because it contains important rock art.

"The hand stencils and ochre paintings, it's been a place where that's been fully inhabited by tribes, the Ngiyampaa tribe," she said.