[3] The Utstein Abbey, the best-preserved medieval monastery in Norway, is located on the island of Klosterøy.

On 1 January 1965, many municipal mergers took place in Norway due to the recommendations of the Schei Committee.

[4] The municipality (originally the parish) is named after the island of Mosterøy (Old Norse: Mostr or Monstr) since the first Utstein Church was built there.

One possibility is that it is a shortened version of the Latin word monasterium which means "monastery", since the Utstein Abbey is located on the northwest end of the island.

A third possibility is that it comes from the word mœnir which means "ridge", likely referring to the 154-metre (505 ft) tall Mastravarden, the highest point on the island.