The church stands within an area of long settlement continuity, on a prominent rise in the cultivated, hilly landscape beside the lake. Nearby are the old parish cottage and, across the water, the vicarage.
Accounts of the building's origins differ in detail but agree that it was probably built as a simple hall church around the mid-1600s, later becoming one of the region's few cross-shaped churches when north and south transepts were added in 1759. According to local tradition, the original church lacked a proper foundation and was later split down the middle and pulled apart to create the cross plan. A sacristy to the east and a porch to the west were added in 1705, and the tower on the south side dates from 1884, when the exterior also took on its current white appearance.
Inside, the eighteenth-century chancel furnishings are the most striking feature: an altarpiece, pulpit and hymn-number angels carved in a provincial Baroque style attributed to the sculptor Isac Schullström. The flat wooden ceiling carries decorative paintings from 1777 by the church painter Carl Zetterström, depicting clouds and stars in a style typical of post-Reformation church decoration; these were later covered over and only rediscovered and restored in the 1930s.```
A baptismal altar with an older eighteenth-century altarpiece stands in the north transept, and the organ, built in 1884, occupies the west transept.
Several older furnishings survive, including a soapstone font and a bronze censer both said to date from the medieval period, and two medieval bells - unusually, Laxarby is noted as the only church in Dalsland to retain a pair of uninscribed medieval bells, one markedly older than the other. The churchyard contains older wrought-iron grave crosses. The interior has been altered more than once, including significant nineteenth-century changes and a further redecoration in 1982, which established the colour scheme seen today.