The word Aileu means "bent tree" in the local Mambai language.

[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.

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.