During the First Age, the Ered Luin was an unbroken line seperating Eriador from Beleriand. Seven rivers arose in it on the western side, and the land these rivers flowed through was known as Ossiriand, and later also as Lindon, therefore the mountains were sometimes referred to as the Ered Lindon. The dwarven cities of Belegost and Nogrod were located in this range.
The mountain range was broken during the war of the Valar against Morgoth, and at the middle of the range the sea broke through, creating a new terminus for the river Lhûn. In the middle of the gap, where the Lhûn met the sea, the Grey Havens of Mithlond were created.
During the creation of Arda, the Blue Mountains were meant to line up directly with the Grey Mountains of the southlands, forming the western wall of Middle-earth, just like the Red Mountains (or Orocarni) and Yellow Mountains formed the eastern wall. The range of the Blue Mountains was originally connected with the Red Mountains by the Ered Engrin or Iron Mountains. But this symmetry of Arda was broken during the wars before the Years of the Lamps.