The border town was founded by the Marquis of pombal in 1774 as a counterpoint to the Spanish city of Ayamonte on the opposite bank of the Guadiana. The new town, which was built in five months(!), is a fine example of the town planning of the day with its grid plan streets and whitewashed houses.

This unusual town, 53 miles (85km) east of Faro, is neatly designed on a geometric grid system, radiating out from the central square, the Praca Marques de Pombal, with its dramatic paved radial mosaic floor, edged with orange trees. The town is on the west bank of the River Guardiana, facing Ayamonte, Spain, which is on the east bank.

Near to Vila Real de Santo António is the purely holiday destinations of Manta Rota, Monte Gordo and Praia Verde, all providing long sandy beaches.