[2] The favourable climatic conditions, the construction of hotels and resorts, foresting, and maintenance of beaches have led to the intensive development of tourism.

The town is located in the most protected part of the Lošinj bay, on the eastern, sunny side of the island.

There were as many as eleven shipyards, and it became the place with the largest and most developed merchant marine in the Adriatic Sea, even ahead of cities like Rijeka, Trieste and Venice.

"[4] With the invention of the steam engine a stagnation in development ensued, and with the outbreak of the grapevine disease peronospora.

Previously part of the Venetian Republic, Mali Lošinj passed under Austrian-Hungarian rule in 1797 with the Treaty of Campo Formio.