The first house in Egilsstaðir was built in 1944, and since then the town has grown steadily. Today, it is a thriving centre with an economy based on providing services for east Iceland and travellers. Egilsstaðir was the site of an ancient assembly, and a site where criminals were eventually executed. The headquarters for the State Forestry Service are located here. The country's largest forest, Hallormsstaðaskógur
, is just a short distance from the town to the south.
This village is situated west of the bridge over Lagarfljót
river, and has been expanding in recent years on land named Fellabær. There is an old ferry site named Ferjusteinar and Ferjuklettur. Like the residents of Egilsstaðir, the people of Fellabær support themselves primarily by providing various services. Fellabær and Egilsstaðir are now part of Fljótsdalshérað county.