The municipal area stretches along the valley of the Drava river, where it enters the Lurnfeld plain between the Kreuzeck group of the Hohe Tauern mountain range in the north and Gailtal Alps in the south.

The origin of the name is uncertain: an affiliation with the far apart mediæval Duchy of Saxony has never been established; however the coat of arms probably awarded in the 16th century shows a Saxe, a kind of pan formerly used for gold prospecting within the nearby Hohe Tauern range.

The strategically important narrow place of the Drava valley (Sachsenburger Klause) probably was guarded already in Roman times, when the area was part of the Noricum province.

Sachsenburg is documented as an administrative seat of the Archbishops of Salzburg in 1292, who held large possessions within the Duchy of Carinthia.

The Sachsenburg municipality originated in 1850, it was merged with neighbouring Möllbrücke and Pusarnitz into the market town of Lurnfeld, but regained independence in 1992.