From the early 20th century, Reydarfjordur was a trading port, as well as a fishing port. Due to its strategic location and good harbour conditions, it became the second largest of the Allied bases in Iceland during World War II. There is a WWII museum located at the old camp above the town.

Having mostly been a quiet fishing town since the war, Reydarfjordur (and neighbouring communities) saw a revival in the early 2000s when Alcoa decided to build an aluminium plant there. It was built in 2003-7 by the contractor Bechtel, requiring thousands of workers from various countries, most notably from Poland. At one point the town had the highest concentration of foreign residents of any community in the country, and the number of workers reached as high as 2800.

Wikipedia articles for Reydarfjordur

• Fjarðabyggð
• Fjarðabyggð
• Reyðarfjörður
• List of aluminium smelters