Grundarfjörður is a growing community on the fjord Breiðafjörður near the midpoint of the northern coast of Snæfellsness peninsula. The site is characterized by a unique climate and unusually beautiful surroundings. Fishing is the chief industry in Grundarfjörður, half of the town's working population being employed in this sector, although other services and industry are growing as well. The town is considered unusually beautiful and well-kept and has received several awards for its neat appearance.

The geology of Grundarfjörður is unusual, as it spans the entire geological history of Iceland. Volcanic activity is thought to have begun here about 18 milion years ago, dying out about 6 million years ago. The volcano Rauðukúla í Helgrindum is about 3000 years old.

The harbour is the district's lifeline. Excellent harbour facilities and favourable natural conditions have encouraged the growth of the fishing sector. Well-established fishing companies operate in Grundarfjörður. They possess quotas for a variety of species, which means that fishing activity is evenly distributed throughout the year. The industry has been developed with a view to the future, and today, Grundarfjörður's harbour is one of the 10 largest quota-fishery harbours in the country, and the largest demersal catch in West Iceland is landed here. The entrance to the harbour in Grundarfjörður is secure and easily navigated. Minimum depth at the main pier for ocean-going vessels is 6 metres at low tide. The range of services available to ships has grown as the fleet has expanded and harbour activity increased.