It is situated on the bank of the river (or strait) Peenestrom, vis-a-vis the island of Usedom on the Baltic coast that can be accessed by road and railway via a movable bascule bridge (Blaues Wunder).

The precursor of present-day Wolgast was a Slavic Wendish stronghold located on an island within the Peenestrom sound.

[2]: 152, 160  In this context, Wolgast was described as a opulentissima civitas by the chronicler Ebo, it is however unclear whether this should be read as meaning opulent or mighty "castle" or "town".

[8]: 23–25  In 1164, in the context of the battle of Verchen, a Danish force under Wetheman took control of Wolgast, and left it to a mixed Rani-Pomeranian-Obrodite garrison after peace was restored.

[11] It is not known when exactly this city of Wolgast was granted German town law, though its existence is confirmed by a letter written in or before 1259.

The former ducal palace decayed, and the town was burned down in 1713 by Russian forces during the Great Northern War, in retaliation for Swedish arson in Altona.

[12] Most houses of the Old Town therefore date back to the 18th and 19th centuries,[13] the townhall was renewed after the fire in baroque style.