It is situated on the east coast of the islandon the Vágsfjørður fjord, and was founded in the fourteenth century. Expansion has meant that the nearby town of Nes is now a suburb of Vágur. Vágur has a sports hall next to the football grounds on Eiðinum, near Vágseiði, a swimming pool by the school and a clinic which offers the services of doctors, nurses and dentists. There is also a hotel, one bank and various shops.

The port area, which is 14 m in depth, is situated on the northern part of the fjord.^[3] The port authorities can offer services of piloting (lods), water and fire-fighting, and in connection with the harbour there is a modern fish factory and auctioneers for fish. Salmon farming is also a part of the fish industry in Vágur, this includes salmon farm rings on the fjord and in other places near the east coast of Suðuroy and a salmon factory. The town has a slipway, a fleet of fishing vessels and a filleting factory.