The village is situated at the edge of a bay and expands into the surrounding steep hills. The town centre is located close to the harbour and contains most of the shops and services. The harbour in Fuglafjørður is busy, as the town's economy is based on the processing of fish and fish meal. There is fishing-industry, a slip, production of trawl and also oil-depots. In the 1970s there was a terrible stink from the fishing-industry but that has since been solved.
In the past years Fuglafjørður has also become famous for its newly established cultural centre in the town centre that has become one of the main cultural attractions in Eysturoy.
In the 1840s the small village Hellur in north of Fuglafjørður was established. However this village never grew large and now only approximately 30 of the municipality's inhabitants live there.
In the 1980s the suburb of Kambsdalur was established, and now about 180 of the population in the municipality live here. In Kambsdalur there is also a large industrial cluster, the educational centre of the northeastern Faroes and the regional sportscentre used mainly for handball, volleyball and indoor football.