Its history is traced to 1873, when it was decided to build two blast furnaces at the location.
The town of Hagfors plays host to the Swedish Rally, a car rally, every February, which provides a significant annual economic windfall for the region.
Hagfors was one of the last places in Sweden to receive the formal title of a city, when it was detached from Norra Råda in 1950. The designated coat of arms was a tribute to the furnaces. At that time the town had 6,501 inhabitants. Today it is the seat of the much larger Hagfors Municipality, but is not an administrative entity of its own.