Veliky Ustyug is close to the confluence of the Sukhona (flowing from the west) and the Yug (from the south) rivers.

It was a part of the Vladimir-Suzdal Principality (in contrast to the neighboring lands, most notably Totma, colonized by Novgorod).

[10] In the 15th century, Veliky Ustyug became notable for the war between Vasily II of Moscow and his cousin Dmitry Shemyaka, which left northern Russia deserted.

Shemyaka took Veliky Ustyug in 1450, drowned in the Sukhona those citizens who refused to accept him as a prince, and made the town his residence for two years, until he was driven off by the forces of Vasily.

[10] At the junction of important trade routes, the town turned into a significant commercial and industrial center in the 16th and 17th centuries.

Veliky Ustyug area was the birthplace of the explorers Semyon Dezhnyov, Yerofey Khabarov, Vladimir Atlasov, and of St. Stephen of Perm.

The 16th and 17th centuries were the time of the highest rise of the culture in Veliky Ustyug, in which it acquired a national-wide significance.

The town is known for its remarkable handicrafts, such as silver filigree, birch bark fretwork, decorative copper binding, and niello.

In the course of the administrative reform carried out in 1708 by Peter the Great, Veliky Ustyug was explicitly mentioned as one of the 20 towns included into the Archangelgorod Governorate.

Veliky Ustyug, in contrast to the majority of historical Russian towns, managed to preserve almost all of its architectural and cultural monuments.

This group managed to convince the authorities that the churches and old buildings have a historical significance and must be handed in the museum rather than demolished.

It was built in the beginning of the 21st century; before this road was opened, the only way to get from Veliky Ustyug to Vologda was via Nikolsk and Totma.

An unpaved road, originating from Kuzino (which is connected with Veliky Ustyug by a ferry crossing) runs to Luza and continues to Lalsk and further to the Komi Republic.

The population of Veliky Ustyug was steadily growing until the second half of 20th century, but in the recent years it has been on decline, as is the general trend in Russia.

[19] The museum currently serves as an umbrella institution that organizes permanent and temporary exhibits in the former church buildings.

In 1998, then Moscow Mayor Yury Luzhkov proposed to officially locate the residence of Ded Moroz aka "Grandfather Frost", a legendary figure similar to Saint Nicholas, Father Christmas or Santa Claus who has his roots in Slavic pagan mythology,[20] in Veliky Ustyug.

The residence, which is a resort promoted as the Votchina ("estate") of Ded Moroz, is a major tourist attraction.