The city was founded in 1680 when the Royal Swedish Navy was relocated from the Stockholm area to the Tross� island which had up until then been used chiefly for farming and grazing. At the time Sweden was the dominant military power in the Baltic sea region, but needed a better strategic location against Denmark, since southern parts of Sweden had been conquered only a few decades ago (see the Torstenson War). The Swedish fleet tended to get stuck in the ice during winter while located to Stockholm and was therefore moved south. The island had a very strategic position with short sailing distances to the German and Baltic provinces. The city name means Karl's Crown in honour of King Karl XI of Sweden, the name being inspired by the name of the city Landskrona.
The city grew quickly and by 1750 Karlskrona had about 10,000 inhabitants. It was then one of the biggest cities in the country. Most of the baroque buildings from this era are still standing, which is why the city centre is architecturally uniform.
The shipyard in Karlskrona was established almost at the same time as the city. It was a necessity because of the heavy losses the Swedish navy had suffered in 1689. In 1711, the shipyard was Sweden's largest industrial employer with 1,100 workers. The oldest dock, the Polhem dock, is cut in the cliff itself and is still in use. It got its name from Christopher Polhem ("The Swedish DaVinci", a famous scientist with several inventions still in use).
The city has kept its street structure since its foundation. Since the streets all follow a grid pattern the winds can blow freely from the ocean right into the heart of the city.
Parts of the city have been declared a UNESCO World Heritage Site.
In October 1981 the Whiskey-class Soviet submarine S-363 (called "U137" by the Swedes) ran aground in the archipelago just outside Karlskrona. The media characterized it as the "Whiskey on the Rocks" affair. The incident caused a temporary
