Seyðisfjörður started as a trading centre in 1848, but its later wealth came from the ‘silver of the sea’ – herring. Its long, sheltering fjord gave it an advantage over other fishing villages, and it grew into the largest and most prosperous town in East Iceland. Most of the unique wooden buildings here were built by Norwegian merchants, attracted by the herring industry.
During WWII Seyðisfjörður was a base for British and American forces. The only attack was on an oil tanker (the El Grillo) that was bombed by three German warplanes. The bombs missed their target, but one exploded so near that the ship sank to the bottom of the fjord, where it remains today (a good dive spot).
Seyðisfjörður’s steep-sided valley has made it prone to avalanches. In 1885 an avalanche from Bjólfur killed 24 people and pushed several houses straight into the fjord. A more recent avalanche in 1996 flattened a local factory, but no lives were lost.