The 3.8-square-kilometre (1.5 sq mi) island is located along the southern Skagerrak coast and it has roughly 200 permanent residents (2017).

Though the island is in no way self-sufficient, with most of the adult residents working on the mainland, it manages to maintain a strong community, with a school, a kindergarten, a movie theater, a choir, a local store, a boat building workshop, and an architect's office.

In this period, trading and seamanship dominated this part of Norway, and most adult men sought work on the sea.

All the traveling had an effect on the local dialect (which is, sadly, dying out); the language was assimilated with English terms picked up by the sailors.

Along with hundreds of thousands of Norwegians, many inhabitants of Sandøya emigrated from Norway to the United States in the late 19th and early 20th centuries.

Sandøya experienced a sharp decline in population during the first half of the 20th century, as sailing was replaced with steam-powered boats.

One factor which has helped to increase the population is district-friendly legislation executed by Tvedestrand municipality called "boplikt".