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Icelandic villages nestled in fjords are likened to pearls in a shell, and none fit this description better than Seyðisfjörður. The 17km-long (11-mile) fjord is lined with sheltering, snow-capped mountains and tumbling waterfalls. The dizzying descent into the fjord makes drivers feel like swooping gyrfalcons. The village, enlivened by colorful, Norwegian wood kit homes from the 19th and early-20th centuries, is a popular summer retreat for artists and musicians; the ferry from Europe arrives here weekly.

Seyðisfjörður is an ideal harbor, and became a trading center in the early-18th century. In the late-19th century it became a boom town, thanks to the herring trade, largely controlled by Norwegian merchants. In 1906, Seyðisfjörður was chosen as the entry point for Iceland's first undersea telegraph link to the outside world. During World War II Allied forces built a camp on the fjord, and a German air raid sank the El Grillo oil tanker, which still lies at the fjord bottom. Seyðisfjörður's economy still relies on fishing, and is prone to the same uncertainties faced by other Eastfjord villages. The fish factory went bankrupt in 2003 but is now back in operation.