A trading port to the East of Northern Mirkwood, founded by Men upon the Long Lake formed by the confluence of the Forest River and the River Running. Also known as Lake-Town. It was subject to cold east winds and afforded a view of the Lonely Mountain.

Esgaroth was a prosperous town, and its merchants traded not only with Dale and Erebor, and the Mirkwood Elves, but imported wine and goods from Dorwinion and lands to the south. It was built out from the shore, on piles driven into the lake bed at the point where the Forest River entered the Long Lake. There were few buildings on shore. The town was reached by a long bridge with a guarded gate at its far end leading into the Market Place, a circle of still water with quays and the grand houses of the merchants.

In TA2770 the Dragon Smaug drove the dwarves from Erebor and destroyed Dale. By the time of the Quest of Erebor the town was commonly referred to as Lake-Town and was smaller and less prosperous than it had been. The bridge was poorly guarded and rotten piles from the old extended town could be seen exposed during drought. The fleets of boats and high civilisation were gone and the army only a legend. The merchants as ever controlled the town, under the leadership of a Master.

In TA2941 Bard the Bowman killed Smaug with an arrow. In his death throes the dragon fell on Esgaroth and destroyed most of the town. A quarter of the population perished and of those who escaped some later died of exposure and disease.

Yet after the death of Smaug, dwarves returned to Erebor and Dale was restored by Bard. Part of Smaug’s treasure hoard was used to rebuild Esgaroth which resumed trade and slowly regained its former prosperity.

NOTE: Additional information from Cirdaneth.
Encyclopedia entry originally written by PotbellyHairyfoot