The town is located near the mouth of the Lyngdalsfjorden, about 5 kilometres (3.1 mi) east of the village of Vanse.

It was a sheltered place for merchant ships to dock as opposed to the nearby ports at Lista or Lindesnes which were exposed to the open ocean.

The merchant, Jochum Brinch Lund is often referred to as the founder of the town since he was instrumental in the village receiving ladested status in 1795, giving it special trading rights.

Again, in 1948 another small area (population: 64) was transferred into the town of Farsund from the neighboring municipality of Lista.

[4] During the 1960s, there were many major municipal mergers across Norway due to the work of the Schei Committee.