Hattarvík lies well-sheltered in a deep bay on the eastern side of Fugloy. The tall rocky beach protrudes like a fortress against the breaking waves beneath the village, where rebels once plotted to seize control of the Faroe Islands.
Hattarvík is mentioned in Hundabrævið, a Faroese letter about dog keeping written around 1350, and the village is the setting of dramatic legends and folktales which still appear in the place names in the village – for example Gullheyggur, Rólvasteinur and Kellingagarður. The population was at its highest during the Second World War when around 100 people lived in the village, but the population has been steadily decreasing since the mid-1960s. Very few people live in Hattarvík all year round, but the village has – like Fugloy – become a popular holiday destination.