(Sindarin for Blue Mountains) is located in the far west of Eriador, north-west of and connected to the Shire. The Blue Mountains, as they are known in Westron, are dominated by Dwarves descending from the exile king Thráin II and by Elves who used to live in Edhelion but now are established in the south along river Lhûn.
Ered Luin has a long history, though not prominent nor prosperous in any way, being just a remote mountain ridge it did not attract much interest. This did not change when Thráin and his son Thorin Oakenshield arrived, only iron could be mined there. Even so, the Dwarves of the Blue Mountains remained in the region, side by side with elves gathering wood used for their white ships and running famous vineyards long since.
However, Thorin left Ered Luin and together with a throng of dwarves, Gandalf and a famous burglar he tried to reclaim his father's lost treasures; Thorin completed his quest but died. Nonetheless, in our story he had made a Dourhand the Master of Thorin's Hall and with that background a new Dwarf or Elf character enters the starter area in Ered Luin.
In the beginning Ered Luin (Sindarin for Blue Mountains) was an unbroken mountain ridge, a natural border between Eriador and Beleriand. The elves who settled in Lindon named it Ered Lindon. Also dwarves settled here but these settlements were destroyed in the War of Wrath when the mountains were brought apart and river Lhûn broke through them to the Grey Havens, which survived and remained an elven harbour.Much later Thráin II established himself in northern Ered Luin when he was exiled by Smaug, the dragon. Probably many of his righteous folk moved back to the Lonely Mountain (Erebor) when Thorin Oakenshield retook the domain about 77 years before Frodo left the Shire; that would explain a wake in which much of the decadent happenings now are taking place.