Since the early 13th century, there has been a trading post at Sandtorgholmen (where the village of Sandtorg is located). This location became more important in the late 18th century when pilot services were added for foreign and local ships. The trading post continued to be a focal point of Sandtorg until 1945 when the Norwegian Army’s communication services took over the facilities after the German occupation (1940–1945). The army returned Sandtorgholmen to civilian use in the 1990s. Today, the Sandtorgholmen trading post features a hotel with a harbor restaurant and meeting facilities.
The municipality of Sandtorg was established on 1 July 1926, when the municipality of Trondenes was divided into three separate municipalities. The areas east of the Tjeldsundet strait and east of the Vågsfjorden (population: 2,443) became the municipality of Skånland and the areas on the west side of the Tjeldsundet and Vågsfjorden were split two ways. The southern part (population: 4,224) became the municipality of Sandtorg and the northern part (population: 3,429) remained as the municipality of Trondenes.
During the 1960s, there were many municipal mergers across Norway due to the work of the Schei Committee. On 1 January 1964, Trondenes municipality (population: 6,567), Sandtorg municipality (population: 7,512), the town of Harstad (population: 3,808) were merged to form a new, larger Harstad Municipality.
Bjarne Berg-Sæther (born 1919) was a significant leader in Sandtorg during the 20th century. He was the mayor of Sandtorg from 1948 until 1964 when it was merged with Harstad. He was also the first mayor of the newly merged municipality of Harstad, which occurred in 1964 (and therefore also the last mayor of Sandtorg). During his 20 years as mayor after World War II, boat building factories at Rødskjæret were added, lighted ski tracks, and a community cultural house was built. Many of these additions caused Sandtorg’s population to almost double. Today, Sandtorg is a community in transition from farming, fishing, and meat production to a commuter community with a significant part of the population working in Harstad about 37 kilometres (23 mi) away.
Sandtorg is first mentioned in 1321 when Agmund Prest on Trondenes and Ivar Lagmand on Hålogaland testified that in the Oddshus in Vågan they saw Helge Hvasse pay Mr. Erling Vidkunsson a spannleie in Sandtorg.  . Several ancient finds have been made at Sandtorg, and some of these are protected.