Its main importance is as a port as it has the only harbour on Iceland's southern coastline between Grindavík in the west and Höfn in the east.

The port serves direct weekly cargo ferries to Rotterdam and Hirtshals operated by Faroese Smyril Line.

Services include restaurants, tourism, a golf course, motocross field, camping, a sports complex, and a swimming pool.

Several salmon farms (Arnarlax, GeoSalmo, Landeldi, LaxEldi) are among the biggest in the country are west of town.

[5] Þorlákshöfn has a hotel, a camping area, a golf course, various restaurants, and a sports centre with a public swimming pool.