Haugesund is situated on a strategically important sound, the Karmsundet, through which ships could pass without traversing heavy seas. In the early years, the coastal waters off Haugesund were a huge source of herring, and the town grew accordingly. Despite being barely a village back then, King Harald Fairhair lived at Avaldsnes, very close to the modern town of Haugesund. In the last decades, the town, like its neighbours, has been turning towards the petroleum industry, with the herring being long gone.
During the last 20 years, the municipality has established its position as the main trading centre for the Haugaland region and southern parts of Vestland county. It has several relatively large shopping centres, however, this has led to a decline of the trade and shopping activity in the town centre.