The village of Eiði is among the oldest settlements in the Faroe Islands. It is mentioned in writing in the early 14th century and carbondating has suggested that the village was settled by Norsemen as early as in the 9th century. The village is the municipal seat of the municipality.

In terms of history of the municipality it can trace its beginnings back to 1879, when local people sent a written request to the national government regarding the establishment of an independent municipality. At the time Eiði was part of the Eysturoy region. By the autumn of 1894, Eiði municipality was established. The first mayor was Grækaris Joensen. He held the position for 3 years until his sudden death in 1897.