The location of the modern town is believed to be the original landing point for the Portuguese discoverer João Gonçalves Zarco, who is credited with the discovery of the Madeira Islands.

When the explorer disembarked in this area (1419), he observed a narrow rocky peninsula that extended into the ocean, and another nearby that formed an amphitheatre-like harbour that could shelter ships from Atlantic storms.

Located within the metropolitan zone of Funchal, it is limited to the east by Funchal (through the parish of Estreito de Câmara de Lobos); to the west by the municipality of Ribeira Brava and the steep cliffs of Cabo Girão (one of the highest cliffs in Europe: 580 meter elevation); and north by the municipalities of Santana and São Vicente (and the mountains of Pico de Arieiro); while fronting the Atlantic Ocean to the south (except an area in the southwest near Quinta Grande (Fajã dos Padres) whose coast is part of the neighbouring parish of Campanário in Ribeira Brava The decree of 1955 (No.40.221/5 July 1955) defines these limits more explicitly.

Câmara de Lobos is twinned with:[4] Although agriculture and fishing are still considered the primary sources of income, the area has grown as an extension of the tourism industry in the neighboring parishes.

Its local development prospects are tied to the growing tourist market, while for six centuries of history it has been associated with the fishing and agriculture, in particular bananas and other fruits common to the island.