Baependi developed along the Estrada Real - the first major means of regular communication in Brazil which linked the mines to the port of Paraty in Rio de Janeiro from where gold was shipped to Europe.

The Madeiran Tomé Rodrigues Nogueira do Ó (1715), Captain-mor and Ombudsman of Quintos the "registration of the Mantiqueira" was one of the first residents of the site and is considered the founder of the city as the first builder.

It had a large tobacco plantation, which made Baependi the centre of production of the province of Minas Gerais and represented a major source of wealth until the mid-nineteenth century.

Nowadays the municipality's economy is based on agriculture, handicrafts, gem stones, quartzite and tourism, due to the natural environment of the city, surrounded by mountains, forests, rivers and numerous waterfalls.

[citation needed] Pieces made in bamboo, straw, corn and coffee wood are distributed in large urban centres such as São Paulo, Rio de Janeiro and Belo Horizonte.