The fjord is located next to some of Bergen's most important industrial areas, and has played a significant part in the city's development and industrialisation.

The fjord experiences strong currents and has numerous small islets, rendering boat passage dangerous.

The ice, islets, and strong current caused the kings of Alrekstad (today known as Årstad) to avoid using Puddefjorden.

The fjord's northeastern side belonged to the city, however, and scattered habitations appeared there at the end of the 17th century, later becoming the neighbourhoods of Møhlenpris and Nøstet.

The original Puddefjorden was both longer and broader than it is today, but after extensive industrialisation of the nearby areas in the 19th century, the fjord's form was altered.