The municipality (originally the parish) is named after the old Vestby farm (Old Norse: Vestbýr), since the first church was built here.

At the same time they also represent the three natural harbors in the area: Emmerstad, Kjøvangen, and Sonskilen.

Many Norwegian emigrants went to America during the 1840s and later settled in the area of the present city of Westby, Wisconsin (named after general store owner and American Civil War Union soldier Ole T. Westby); a city which still has a mostly Norwegian American population.

The municipality and lading place of Hølen was merged with Vestby on 1 July 1943.

The municipality and lading place of Son was merged with Vestby on 1 January 1964.

Randem is located north of the municipal centre, Vestby, and includes an industrial area.