Sweden founded Pyramiden in 1910 and then sold it to the Soviet Union in 1927. The soviets used to mine coal in the surrounding areas and at its peak Pyramiden had over 1,000 inhabitants, a cultural center with a theater, a library, art and music studios; a sports complex; and a cantina that was open 24 hours a day. The settlement also has some of the world's northernmost objects, like a grand piano "Red October", monument to Vladimir Lenin and the northernmost swimming pool.

As the coal in the last mine run out, the last resident left Pyramiden in 1998, leaving the settlement a ghost town.

Nowadays, Pyramiden is a tourist destination, with a museum and hotel running year-round.