Lüderitz was purchased in 1883 by a German merchant named Adolf Lüderitz from a Namibian Nama chief. Prior to this the port was known as Angra Pequena (Portugese for 'Little Bay'). Serious development in the area began around 1908 with the discovery of diamond deposits, and many fortunes were made in a town which expanded rapidly. The nearby town of Kolmanskop was once party to this affluence, but since being abandoned in the 1950's following the slump in diamond sales it has been taken over by the desert sands. The town has an eerie atmosphere of silent degeneration and the windswept interiors of the houses, now half buried in the sand, create a fascinating picture of a bygone era.

The waters off Lüderitz are some of the cleanest in the world, due to the ever present Benguela current, and the town is therefore home to many bird species.