The name Värmdö can be traced to 1314, but it is not clear what it means. (It is likely that it comes from the word värmd, a small hot spring in the ocean which causes holes in the ice in winter, and which there are several of in the area.) The area has however been inhabited longer than that, probably from the Stone Age wherefrom remains are found. The people lived on fishing and the hunting of seals and sea birds. As the coast climate was not suitable for traditional cereal crops, the agricultural efforts were often directed towards the cultivation of potatoes.
After the introduction of steam boat lines around 1850, wealthy people in Stockholm started to build vacation houses around the stations. When today’s main roads were built in the 1930s, only the steam boats serving islands remained, and the expansion continued. With the municipal reform in the 1970s, Värmdö was created through a merger between six small municipalities and adopted the coat of arms of Gustavsberg, with two porcelain ovens.
Today, Värmdö is a rapidly expanding suburban area to Stockholm and also one of the most exclusive areas for vacation houses in Sweden. During the summer month, the population triples.