The favorable position of the town was discovered rather early and in 1550 a trading post was founded at the site. Today, the most important employer of the town after the fishing industry is a convent of Catholic nuns.
The town was named after a small island in front of the harbor with the name Stykkið (meaning the piece in Icelandic). The nearby mountain of Helgafell is the burial place of Guðrún Ósvífursdóttir, a heroine of the Icelandic sagas.
The town's former library has been restored as a public hall and contains an installation by the American artist Roni Horn.
The sports club of Stykkishólmur is called Snæfell (Umf. Snæfell), named after a glacier which is located on Snæfellsnes, called Snæfellsjökull. Their basketball team is one of the strongest in the country
