Knysna was founded around its port, which could provide shelter for up to 50 ships, as well as the region's abundant timber which was exported from here from as early as 1787. Landowner George Rex, who landed at the Cape in 1796, played a significant role in the town's early development and is considered the town's founder. Being a difficult port to enter, a harbour pilot was employed to assist large vessels. One of the better-known pilots was John Benn, originally a shipwright from Mossel Bay, appointed as pilot in 1868 and whose name is borne by a double-deck pleasure cruiser currently operating as a tourist attraction on the Knysna lagoon. The port was officially closed in 1954.
The town is a popular destination for both tourists and senior citizens entering retirement, especially among the British and former expatriates due to the year-round warm climate. Recently the town has also become a preferred destination among golfers, as the town boasts several world class golf courses including Pezula Golf Course, Simola Golf Course and the well established Knysna Golf Course situated on the lagoon. Knysna too is a favourite haunt of artists, restaurateurs and hippies. The nearest beach is located at Brenton-on-sea which lies directly west of the heads and is continuous with Buffels Bay, a popular surf spot.