Laugarnes was probably first occupied in the settlement period of Iceland. The site also contains a church ruin and a graveyard that was abandoned in 1791. Later the Bishop of Iceland had his residence in Laugarnes (1826–1856) and in 1898 a leper hospital was erected there. During World War II a military camp was set up in Laugarnes. The museum of sculptor Sigurjón Ólafsson in Laugarnes was built on the site of one of its baracks. Laugarnes is on the Icelandic Nature Conservation Register and its shores are protected.