The latter part of the 19th century saw a great increase in the number of oared fishing boats.

In 985 C.E., Bjarni Herjólfsson, a young merchant, sailed from Eyrarbakki headed for Greenland, but instead reached as far as North America.

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

The town is of great historical importance because of its role in fishing and trading history.

The nearby prison, Litla-Hraun, the largest in Iceland, is one of the town's main employers.