Gudhjem is a very old town, some archaeological finds have shown that back in the Iron Age there have already been a few towns, where Gudhjem and Melsted are located today.

As Gudhjem and Melsted are located on two different cliffs, right next to the Baltic Sea and the then busy trade route, people have known about Gudhjem since ancient times. At that time, the town consisted of a few fishermen’s houses and a breeder’s farm, and the harbour was made up of natural rocky outcrops with a simple pier. Gudhjem has always been associated with fishing and trade in the Baltic Sea, which continued in the Middle Ages, when the Hanseatic cities also used Gudhjem as a base for their fish purchases. In those days the city was prosperous. By the early 1500s, fishing in the Baltic Sea had ceased, there were no longer large enough shoals to catch them, and the town virtually ground to a halt.