From 1974 to 1984 Vaxholm was united with Österåker Municipality, making up a municipality called Vaxholm, but with the seat in Åkersberga. After the "divorce" the new Vaxholm Municipality came out larger than it had been before the amalgamation. The municipality prefers to style itself City of Vaxholm.
The municipality has a significant amount of tourism. Ships transporting passengers between the islands began running on a daily basis in the 1850s. Today, many of islands (among them the main island Vaxholm) can also be reached by bridges from the mainland. The tourist boats depart from Stockholm's Slussen.