[3] According to legend, the root of a banyan fig tree (Ficus benghalensis) grew to maturity without a branch or leaf.

The tree developed into a twisted shape that looked like a chair; its unique appearance made it famous, and eventually gave the community its name.

It borders Dili to the north, Manatuto to the east, Manufahi to the southeast, Ainaro to the south, Ermera to the west, and Liquiçá to the northwest.

It was formerly part of what is now the municipality of Dili but was split in the final years of Portuguese administration.

The municipality's administrative posts (formerly sub-districts) are:[5] Aileu is the focus of several development programmes from NGOs, including WaterAid,[6] World Vision[7] and Plan International.