The town received the right to do commerce in 1786. Around 1800, French merchants came to Iceland and lived in Grundarfjörður, where they constructed a church and a hospital of their own. The town has become rich through the fishing industry, and this wealth shows in the style of the original, luxurious houses being built.
The road to nearby Stykkishólmur crosses a big lava field, called Berserkjahraun. The name of the lava field comes from the Eyrbyggja saga, according to which two Berserkers were slain here by their master, because one of them fell in love with his master's daughter.
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