The city was founded on July 13, 1279, when King Rudolf I von Habsburg granted Baron Berchtold III of Eschenbach-Oberhofen permission to build a stronghold between the two lakes. The name came from "unter," which in Middle High German meant "between", and "seen," which means "lake." The fortification was given Stadtrecht (town privileges) in this agreement.
The young town was put in an ongoing conflict with the Interlaken monastery and early on sought protection from Bern. During the Reformation the town turned against the Interlaken monastery and was rewarded with the Alp Sefinen. In 1470 Unterseen was burnt down for the second time and Bern undertook the reconstruction with the town house in the center.
After the establishment of the Helvetic Republic, Unterseen became a center of resistance against the reestablished Bern feudalism. The Unspunnenfest in 1805 and 1808 was planned as a means of reconciliation between the urban and rural citizens. The attempt was a failure and the government forbade such a festival. In 1815, many of the town's citizens played a role in the unrest in Interlaken.
In the burgeoning tourism of the middle of the 18th century, Unterseen played an important role, which has since been taken over in large part by Interlaken
