Engey is the second largest island on the Kolla Bay.  Its name is most likely derived from its meadows, which were used for haymaking.  The Sturlunga Saga mentions the transport of dried fish and grain from the island in 1226, which suggests fishing outfits and grain crops cultivation on the island.  The Njal’s Saga tells us about the ownership of the island at the time.

The first church there was consecrated in 1379 and the last one was desecrated in 1765.  The last farmhouses had decayed for years and become a blemish at the entrance of the capital from the sea in the sixties.  They were painted and stood like that for several years before they were burnt down.
An outlaw thief, Arnes Palsson, who had accompanied the country’s outlaws in uninhabited areas in the 18^th century and spent his last years on social welfare on the island, died there in 1805.  Specially shaped boats, popular on the Faxi Bay, were built on and named after the island after 1880.  Such boats were more stable and better sailers than others.

Among the public figures, who traced their ancestry to the islands, were Prime Minister Bjarni Benediktsson and Rev. Bjarni Palsson.  The poet Grimur Thomsen owned the island for a while before it became the property of the government.  In 1978 it was transferred to the municipality.  The lighthouse on its northern end was originally built in 1902 and restored in 1937.