Background In Denmark, influenza A virus of the subtype H3N2 has been dominating the 2016/17 season, as in most countries of the Northern Hemisphere. Objectives This study was conducted as part of the Danish seasonal influenza surveillance programme to genetically characterize circulating H3N2 viruses and determine the seasonal vaccine effectiveness (VE) overall in the Danish population and further on the virus cluster level. Study design Influenza virus positive samples submitted for the national surveillance programme were genetically characterized by sequencing. VE estimates against influenza A and the circulating virus clusters were determined in patients above 65 years using the test-negative case–control design. Results The genetic characterization revealed several genetically drifted viruses, which could be divided into four main clusters by the defining amino acid substitutions: 3C.2a/N121K/S144K, 3C.2a/T131K/R142K, 3C.2a1, and 3C.2a1/N121K. Some of the drifted viruses appeared to be more prominent in vaccinated or non-vaccinated individuals, respectively. Overall the adjusted VE was 7.4% (95% confidence interval (CI): −6.0–19.2) among inpatients and 19.3% (95% CI: −5.7–38.4) among outpatients, respectively. VE for the four main virus clusters was; cluster 3C.2a1: 38.8% (95% CI: −29.8–71.1), cluster 3C.2a/N121K/S144K: 9.2% (95% CI: −63.0–49.4), cluster 3C.2a/T131K/R142K: 19.0% (95% CI: −85.3–64.6), and cluster 3C.2a1/N121K: −12.2% (95%CI: −129.7–45.2). Conclusions Several genetically drifted H3N2 viruses have been circulating in Denmark in the 2016-17 influenza season. An overall low VE was estimated and VE for the four main virus cluster indicate different VEs between the circulating drifted H3N2 viruses.