It is overall the southernmost town of Schleswig-Holstein and belongs to the district (German: Kreis) of Herzogtum Lauenburg.

It took its name from that of the castle of Lowenborch (erected here between 1181 and 1182), deriving from Lave, the Polabian-language name of the Elbe (compare modern Czech Labe).

In medieval times Lauenburg was a waypoint on the Old Salt Route, while today it is the southern terminus of the Elbe-Lübeck Canal.

Following the Napoleonic Wars, Lauenburg was ceded by Prussia to Denmark in exchange for the region of Pomerania.

To the south of the city lies the Elbe and Lower-Saxony, which used to belong to the duchy until it was ceded to the then neighbouring Kingdom of Hanover in 1814.