It is mostly surrounded by Jomala, the second-largest municipality in Åland in terms of population; to the east, it is bordered by Lemland.

[14] Due to its central location in the Baltic Sea, Mariehamn has become a major summer resort town for global tourism; as many as 1.5 million tourists visit annually.

[15][16][17] The town was named after the Russian empress Maria Alexandrovna (1824–1880), literally meaning "Marie's Port".

Mariehamn was founded on 21 February 1861 around the village of Övernäs,[2][18] in what was at the time part of the municipality of Jomala.

In the mid 1800s, the business of cargo shipping started to catch on, and many important shipowners and shipyards took their residence in the developing city.

[20] On 8 November 1963 a devastating plane crash occurred in Mariehamn, in which 22 out of 25 people lost their lives, which made it the second-deadliest aviation accident in the history of Finland.

A powerful incentive for Baltic ferries to stop at Mariehamn is that, with respect to indirect taxation, Åland is not part of the EU customs zone and so duty-free goods can be sold aboard.

Mariehamn features several buildings drawn by Finnish architect Lars Sonck, who moved to Åland as a child.

The main parish church of Mariehamn was opened in 1927 and has been expanded in 1959 and renovated in 1972. when the pews were painted blue.