In 1914, during the First World War German troops led by Major Freiherr Othmar von Stotzingen established a wireless station at Al Hudaydah, which was used during the Arab Revolt to relay communications from Constantinople to German East Africa as well as broadcast propaganda to the Sudan, British Somaliland and Abyssinia.
After a disastrous fire in January 1961 destroyed much of Al-Hudaydah, it was rebuilt, particularly the port facilities, with Soviet aid. A highway to Sana'a, the capital, was completed in 1961. The city was also the site of a Soviet naval base in the 1970s and 1980s.
Al-Hudaydah has a large number of historical places; particularly in Zabid, which is regarded as one of the most important Islamic towns in the world. The city is not large but it has more than one hundred old mosques. Furthermore, it used to have a university, which is as old as al-Azhar.
The Malay writer Abdullah bin Abdul Kadir visited Al Hudaydah on his pilgrimage to Mecca in 1854, and describes the city in his account of the journey, mentioning that the custom of chewing khat was prevalent in the city at this time.
The city was briefly occupied by Saudi forces during the Saudi–Yemeni War of 1934.
During the 2015 Yemeni Civil War, the Houthi-controlled city's port was bombed by the Saudi-led coalition on August 18.The port's four cranes were destroyed and several warehouses were also damaged. The coalition asserted that the port was housing a hostile naval base, but humanitarian aid organizations complained the coalition's naval blockade was preventing relief from reaching those in need.
Situated on the Red Sea, it is an important port, exporting coffee, cotton, dates and hides. It was developed as a seaport in the mid-19th century by the Ottoman Turks.
As of 1920, the British described Al Hudaydah's port as being a "poor harbor." With two entrances, it was only able to provide adequate storage and shelter for small boats, with larger boats and ships having to dock over two miles away. In 1908, a new pier was built, which had trouble with depth, leading most imported items to be dumped on the beach instead of delivered by dock. Coal was often available for visiting vessels. A new harbor was built 10 miles northwest of the town by the Turkish government, with a small train line leading to Al Hudaydah, and connected to the Sana-Hodeida Railway. A French company built the rail system, which was halted upon the Italo-Turkish War breakout. As of 1909, the port was bringing in less than the port at Jeddah. That year, 172 steam ships visited the port. Majority of the goods were from the United Kingdom, with Italy, Russia and Germany coming in behind. German imports had grown from 1905 to 1909, with British shipping declining. Despite struggles with a quality harbor, the town was described as being the center of dhow building.
The city was known for producing striped coarse cotton cloth, woven by hand. The artisans making the cloth were relocated to Al Hudaydah from Zabīd and Beit el-Faki due to tribal conflict. The city was also a center for tanning and sandal making.
In the late 19th-century, Al Hudaydah was a chief exporter of coffee, with that export business shifting to Aden in the early 20th-century due to more secure routes at Aden. Al Hudaydah had to transport their goods usually through Yemen and Indian ports for security reasons, making exportation to the United Kingdom troublesome. During this time period, the region imported cereal and rice from India, cotton from Manchester, England, and the United States, iron and steel from Germany, and general goods from Italy and Austria. As of 1920, the city was exporting fuller's earth, hides, and coffee. The coffee produced in Al Hudaydah was considered some of the finest in the region.