The town was founded in 1624 under the name Konings Bierg by Danish-Norwegian king Christian IV as a mining community (see below), and was granted its royal charter of trade—amounting to official township—in 1802. Kongsberg was established as a municipality 1 January 1838 (see formannskapsdistrikt). The rural municipalities of Ytre Sandsvær and Øvre Sandsvær were merged with Kongsberg 1 January 1964.
The neighbouring municipalities of Kongsberg are Flesberg to the north, Øvre Eiker and Hof to the east, Lardal, Siljan and Skien to the south, and Sauherad and Notodden to the west. Of these, the two first lie in Buskerud county like Kongsberg, while Hof and Lardal lie in Vestfold, and the others lie in Telemark. The town is divided by the river Numedalslågen, which has three waterfalls in the town itself.
Main highways are the E134, crossing Kongsberg east-west (and connected to the E18 to Oslo), and National Highway No. 40 (Riksvei 40), going north-south. Sørlandsbanen railway line stops at Kongsberg station, with connection to local and regional bus lines.
Kongsberg is particularly known for its old silver mines, from which roughly 1,350 tonnes of silver was extracted between the discovery of silver ore seams in 1623, and the last year of mining, in 1957. In 1770, the mines employed ca 4,000 workers, and the town was the second largest in Norway, after Bergen (and thus larger than today's capital, Oslo).
Following several hard years with reduced silver output from the mines, the war of 1807–1814, and a severe town fire in 1810 where 56 houses on the west side were destroyed, mining was complemented by the Government establishing a defence industry in 1814. During peaceful times, the defence industry gradually evolved into many other kinds of high-tech activities as well, now dominating the town's employment.
In 1987, however, the state-owned Kongsberg Vaapenfabrikk (KV) (lit.: "Kongsberg Weapons Factory") suffered a major financial crisis as well as accusations of breaching the CoCom rules by selling sensitive technology to the Soviet bloc. As a result the company was split into several smaller units and partly sold to private investors. Today, the separate firms thrive as one of Norway's main high-tech industrial clusters, centering on the defence and maritime company Kongsberg Gruppen which is listed on the Oslo Stock Exchange.
Kongsberg is also home to the Mint of Norway (Det Norske Myntverket), which exclusively makes Norwegian coins. It was established in 1686, and was renamed from the Royal Norwegian Mint (Den Kongelige Mynt) in 2004 after having been sold to private investors (the Mint of Finland and Norwegian company Samlerhuset) in 2003.
Kongsberg's coat of arms from 1972, based upon the old seal for the city from 1689, shows the Roman god Janus dressed as an emperor (to represent the king); the sword and the pair of scales represents justice.
With the population increase during the town's silver mining heyday of the mid-sixteenth century came the need for a new church, which was built over a period 21 years and inaugurated in 1761. It has an austere red brick exterior, but a richly decorated baroque interior including one-of-a-kind chandeliers made at Nøstetangen Glass Works in neighbouring Hokksund. Kongsberg Church remains one of the largest in Norway with a seating capacity of 2,400.
The church's original baroque-era pipe organ, made by renowned German organ builder Gottfried Heinrich Gloger in 1760–65, was fully restored by Jürgen Ahrend in 1999–2000 and reopened to great fanfare in January 2001. With its 42 voices it is the largest baroque organ in Scandinavia. At the end of January each year, the Gloger Music Festival now draws a select crowd of artists and music lovers from all over the world.
Since 1964, Kongsberg has hosted Kongsberg Jazzfestival, an annual international jazz festival. Heavily sponsored by the local industry, prominent world acts such as BB King, Diana Krall, Ornette Coleman, Joshua Redman and John Scofield have played at the festival in recent years.
Kongsberg's most famous son is a-ha singer, Morten Harket born in 1959. Morten partly grew up here. Kongsberg is also the hometown of composers and pianists Christian Sinding and Halfdan Cleve, as well as pianist Håkon Austbø, jazz pianist Morten Qvenild and jazz guitarist Ivar Grydeland.
Recent winter sports athletes of the Kongsberg region include Olympic snowboarders Stine Brun Kjeldaas and Halvor Lunn; cross-country ski sprinter Børre Næss of the village Efteløt; and ski jumper Sigurd Pettersen of nearby municipality Rollag (60 km/37 mi north of Kongsberg). A large ski center for alpine skiing and snowboarding, with several lifts and ca 320 m of height difference has been in operation and gradually expanding since 1965. Kongsberg hosted the cross-country skiing parts of the 2006 Nordic skiing National Championships. The arranging sportsclub was IL Skrim, the ski tracks being located at former military camp Heistadmoen.