The municipality of Monchique is historically noted for the presence of the Romans at Caldas de Monchique, attracted by the healing power of its waters. In the centuries that followed, the population slowly grew towards the mountain and, by the 16th century, Monchique was important enough as a settlement to receive a visit from King Sebastian (1554-1578), who intended to grant it the status of Town.
Linen and wool weaving, as well as activities linked to chestnut wood, contributed toward the prosperity and development of Monchique, in such way that, in 1773, it was promoted to Town.
Economic fluctuations resulting from industrialization meant the loss of the textile and other manufacturing industries. Today, Monchique is an attractive town, with an active craftsmanship, a diversified economy and geared towards tourism and to handcrafting products that bear witness of the mountain's cultural wealth.