Seyðisfjörður fjord is long and narrow and flanked by high mountains. At its head lies a town which, bears the same name as the fjord itself. The river Fjarðará flows through Seyðisfjörður town and it has one of the best natural harbours in the country.

The town of Seyðisfjörður experienced an economic boom just before the turn of the last century, when the Norwegian Otto Wathne and other entrepreneurs began fishing and processing herring on a major scale. Thus the oldest part of the town is built in 19th century Norwegian-style architecture, making Seyðisfjörður unique among Icelandic fishing towns. The sub-oceanic telegraph cable that linked Iceland with the outside world came ashore there in 1906 and soon connected the rest of the country through overhead lines. During World War II Seyðisfjörður became a major military base.

Seyðisfjörður is the closest Icelandic port to the Faeroe Islands and Europe. Since 1975 a Faeroese passenger and car ferry has operated scheduled weekly sailings between Seyðisfjörður and Scandinavia during the summer, and now part of the winter. This has attracted considerable tourism to the area.

The cultural life is very lively during the summer.  The Á Seyði Art festival is a yearly event.  The Blue Church summer concerts are almost every Wednesday evening in summer.  Art exhibitions are at the cultural center Skaftfell.
 
There is a Handscraft market, swimming pool, a 9 hole golf course,Technical Museum for East Iceland and the Rarik electricity museum. There are a variety of marked hiking trails in the area, and fishing licenses are available for purchase.