Born in 1628 as the seventh son of Nanbu Toshinao, second lord of the Morioka domain, by a concubine, Sensuin. He was initially known by his mother's family name, Nakazato Naoyoshi. In 1664, when Nanbu Shigenao, third lord of Morioka, died without an heir, the shogunate divided the 100,000-koku Nanbu domain: his elder brother Shigenobu retained 80,000 koku as lord of Morioka, while Naoyoshi received a newly created 20,000-koku domain at Hachinohe and took the name Nanbu Naofusa. Naofusa refurbished the buildings of Nakadate, a former satellite castle of the Nejo Nanbu clan, into Hachinohe Castle, and began organizing his retainer band and developing the castle town. He died suddenly, however, only four years after founding the domain, in 1668 at age 41. Although recorded as a natural death, some accounts suspect involvement by the Morioka domain, and the shogunate is said to have investigated the matter.

Though he became a daimyo somewhat suddenly through the partition of the Morioka domain, he energetically pursued castle development and the organization of his retainer band in his short time as lord. His sudden death at a young age left few recorded achievements, but he single-handedly laid the foundations of the new Hachinohe domain.

On the site of Hachinohe Castle, which Naofusa developed, Sanoshiro Shrine was founded in 1874, enshrining deities associated with the Nanbu family including Naofusa himself. The Hachinohe domain he founded continued under his descendants until the Meiji Restoration.