Christiansfeld town was founded in 1773 by the Moravian Church and named after the Danish king Christian VII. Most of Christiansfeld was constructed in the years 1773-1800, following a strict city plan. To encourage construction, king Christian VII promised a ten-year tax holiday for the city and paid 10% of the construction costs of new houses. It was one of many towns in Schleswig officially designated a small market town (flække).

In 1864, Christiansfeld and the rest of Schleswig was ceded to Prussia as a result of Denmark's defeat in the Second Schleswig War. It remained a part of Germany until 1920 when, as a part of a plebiscite called for by the Treaty of Versailles, Northern Schleswig voted to rejoin Denmark. After reunification, the Moravian church lost some of the rights it had obtained as a part of the town's founding in the 18th century. For example, it no longer had the ability to choose the towns leadership, paving the way for the town's first Danish mayor who was not a member of the church in 1920. The church also sold its schools at this time due to the declining membership of its congregation.

Today, the city is a tourist attraction: the old city core, the Moravian Church with its light, simple and impressive hall and the special cemetery draw thousands of tourists each year. Its well preserved architecture is one of the reasons it was nominated as a tentative UNESCO World Heritage Site in 1993 and finally named as a World Heritage site in 2015.

The town is famed for its honey cakes. These are baked to a secret recipe from 1783. Until 2008, the cakes were baked in the original 18th-century bakery, which was then renovated because of new national sanitary standards, but still uses the original recipes.

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