Flatey is an island in Breidafjordur bay and means "flat island".
Old houses, shops and warehouse buildings on Flatey reflect the optimism and development of the period around 1900.

Back in the days was the island really important both as a fishing centre and as the hub of commercial life of the Breidafjordur area. Traders from the Hanseatic League in Germany ran a trading post here. The first Icelandic trader received a temporary licence in 1589, and in 1777 Flatey received a charter as a town.

Flateyjarbok, (the Book of Flatey), one of the most important and impressive of the ancient Icelandic saga manuscripts, was preserved on Flatey in the Middle Ages. A photocopy reproduction is on display in the library (the oldest one in Iceland, built in 1864 in the heyday of Flatey’s prosperity.)