For ages, Eyrarbakki was “the” town in the minds of farmers along the entire south coast and the region as a whole. This is where the largest warehouses were built and the Episcopal See of Skálholt had its harbour and kept its ships. The fate of thousands of people was decided by the news that arrived, or did not arrive, with the spring ship—-the first ship that arrived after a long hard winter.

For centuries, the harbour at Eyrarbakki was the main port in the south of the country, and Eyrarbakki was the trading centre for the whole of the southern region extending from Selvogur in the west to Lómagnúpur in the east. By about 1925, however, Eyrarbakki lost its importance as a trading centre. The latter part of the 19th century saw a great increase in the number of oared fishing boats. In fact, although trade and fishing were the main occupations in Eyrarbakki, the natural harbour conditions were not good, and after the bridging of the river Ölfusá near Eyrarbakki, the harbour fell into disuse.

The oldest timber house in Iceland, called simply “The House” (Húsið), was built in 1765 from a kit shipped from Norway. It is the oldest preserved timber dwelling house in Iceland. Now home to a folk museum, it stands a little east of the church, just a few doors down from the Rauða Húsið. The House soon became the centre of a blossoming culture and art activities in the area, mostly from Denmark, since Eyrarbakki was the first port of call for foreign influences in music, literature and art, and was the largest trading centre in the country for a very long time.

Eyrarbakki has played a critical role not just in Icelandic history but also in world history: Bjarni Herjólfsson, who lived here in Eyrarbakki in the 10th century, sailed occasionally to Greenland to trade. On one such voyage his ship was blown off course and Bjarni and his crew were the first west Europeans to sight the east coast of a continent that later came to be known as the New World. After his return, Bjarni told Leif Eiríksson his tale and sold him his ship. Leif followed Bjarni’s path and discovered America in the year 1000 and named it Vinland. In 1968, at L’Anse aux Meadows in Newfoundland, ruins of houses were found that proved the old tale of Leif’s voyage and settlement in the New World.

The primary school, established in 1852, was the first in the country. The building still stands, though the school has been relocated.

The church in Eyrarbakki, next to The Red House was built in 1890; its altarpiece was painted by Queen Louise of Denmark, wife of King Christian IX, great-great-grandfather of Queen Margrethe II of Denmark, Elizabeth II of the United Kingdom and King Harald V of Norway.

In 1915, total alcohol prohibition was enforced in Iceland. A multitude of farmers then started their secret operations all around the country, but none was as clever as Höskuldur Eyjólfsson. His homebrew was considered best to none and the authorities never managed to shut down his operation. When big gatherings were held, he had bottles buried all over the fields and then he told each client where his bottle was hidden. Once he went on a sales trip to a large sheep-gathering and hid many bottles under a cloth on his horse. He then joined the sheriff on the road to the gathering to avoid arousing any suspicion. All over the country, homebrew was referred to as “landi” (country product) but in the south region it was called “Höskuldur” in honour of this Robin Hood of the prohibition years.

Thjórsár-lava is the largest lava stream to have emerged in a single eruption since the end of the last Ice Age, some 8,700 years ago. A monstrous eruption took place when a 30 km long fissure opened close to the Veidivötn district in the east. The lava flow spread westward and ended here in the ocean off the south coast, about 140 km from the eruption site, and is between 15 to 40 meters thick. Eyrarbakki and Stokkseyri village stand on the edge of Thjórsár-lava, so this is the best place to see it, but also at the Urridafoss waterfall, which falls down the eastern edge of the lava flow.