In 1916 a part of the rural municipality of Markaryd was detached from it, forming a market town (köping) with the same name. The two entities were reunited in 1960. The present municipality was created in 1971, when Traryd and Markaryd were amalgamated.
The nature is mainly dominated by forests, as usually in Småland, but there are also significant agricultural areas. Stretching from the northern to the southern parts is the river Lagan, making up the foundation of the water system with opportunities for fishing, canoeing and camping. There are also specific areas created for walks in forest and wildlife nature, and just east of the town Markaryd is a possibility for moose safari, arranged by Smalandet.