Sanden, which consisted of the small area near the harbor, was the original name for the municipality of Lillesand. Lillesand is built on the ancient estate of Lofthus.Christian Jensen Lofthuus was captured on his Lofthus estate around 1780.
In 1821, when Lillesand became a privileged port, it had a population of only 300 and had nine shipyards.
Lillesand Church, consecrated in 1889, stands on a hill at Kirkeheia. It is in the Gothic Revival/Swiss style.
By 1895 the merchant fleet was 95 vessels strong. But the death of the sailing ship caused severe economic difficulties for Lillesand. Sailing ships had been inexpensive and could be built from local timber. Steamers were built of steel, were expensive and required more capital than locals could muster. Shipyards were closed. Many of the residents emigrated from there to the United States. Lillesand remained a fishing village, though even this area suffered when the herring left the coast.
The Saltholmen Lighthouse, located on an island off Lillesand, is a nineteenth century lighthouse with a slate roof and a concrete tower for the light. It operated as a manned lighthouse from 1882 to 1952. Saltholmen (lit. "Salty Islet") is named after the salt extraction industry once there, established by Hans Nielsen Hauge.
The Lillesand- Flaksvandbanen operated between Lillesand and Flaksvann from 1896 to 1953.
The Orze?, a Polish submarine sank the German troop transport Rio de Janeiro on 8 April 1940 off Lillesand. The Rio de Janeiro was on its way to take part in the initial landings of Operation Weser�bung, the invasion of Norway
