Fajã da Ovelha originally served as a port of easy access to Madeira, in an area that crossed by several major ravines.

Much like many of the parishes, the settlement originally formed around a small chapel, this dedicated to São Lourenço, and the community was drawn together common agricultural roots.

It is unclear when the settlement formed, and the unique story relates to a settler, Gonçalo Ferreira de Carvalho, who "lived [here] in the years around 1480".

[3] In 1705, the Infanta Catarina, the Royal Regent, approved the construction of a new temple, whose location became the centre of the parish (until then composed of dispersed homes throughout the foothills of the Serra do Paul).

It was concluded at the end of the 18th century and invoked the name of John the Baptist, while the smaller chapel of São Lourenço remained a functioning entity in its own right.