A wharf was built at Bermagui in the 1870s for the coastal trade. The port was serviced by the Illawarra Steam Navigation Company.
A 1910 article, 'Bermagui - In a Strange Sunset', published by Henry Lawson in The Bulletin describes a steamer journey from Bermagui to Sydney. Lawson was probably travelling with the Illawarra Steam Navigation Company.
In 1880, a geologist, Lamont Young, and four others disappeared while on a boat trip from Bermagui. Their boat was found near Mystery Bay, which is about 15 kilometres north of Bermagui, midway between Bermagui and Narooma, near Tilba. The bay received its name because of the disappearance.
Zane Grey, the well-known big-game fisherman of the 1930s and author of Westerns, wrote of his experiences there. He was patron of the Bermugui Sport Fishing Association for 1936/37 and anchored his yacht, the "Avalon" in Horseshoe Bay.
In 1943, the Japanese submarine I-21 sank the iron ore carrier SS Iron Knight off the coast of Bermagui. Local fisherman had tangled their nets on the wreck deep below the surface in 125 metres of water, but did not know the ship lay there until a team of divers confirmed its existence on June 4, 2006. On July 29, 2006 relatives and descendants of the ships crew came to Bermagui for a memorial and commemorative service.
During the 1950s the detective writer Arthur Upfield lived in the town and made it the setting for one of his novels.
A fishing harbour was built at Bermagui in 1959, the first in a new series by the Public Works Department.
Over the Christmas break 2004/2005, the Leader of the Opposition, Mark Latham retreated here from the media and decided to resign as ALP leader and from Parliament remarking in his biography, "Thank God for Bermagui".