A study of the defensive conditions of the archipelago of the Azores, from pirates and privateers, attracted by the riches of the ships returning from Africa, India and Brazil, began in the middle of the 16th century by the military engineer Bartolomeu Ferraz.

Its construction was unlikely to have taken long: in fact, a Royal order for the director of Public Works, Luís Gonçalves, obligated him to visit the islands of Faial and São Jorge to get those projects completed.

Subordinate to the administrative authority of Terceira, Horta was ever fearful of attacks; the Battle of Salga (1581), led the military to strengthen the fortifications along the coast of Faial, repairing existing defences and constructing new battlements.

During the Iberian Union crisis (1583), Santa Cruz defended Horta from a Spanish armada under the command of Pedro de Toledo, who disembarked in the nearby village of Pasteleiro.

After marching from their beachhead to the village of Horta, the Spaniards attacked and defeated the regiment, eventually capturing and executing the Captain-major António Guedes de Sousa at the doors of the fort.

Ironically, this was a regrettable decision: on 6 September 1589 an English fleet, under the command of George Clifford, 3rd Earl of Cumberland as part of his Azores Voyage of 1589, arrived in Horta harbour, captured a carrack from India and seven other ships at the port, and attacked the village, sacking the buildings and forcing the residents to flee into the interior.

[10] A month later (May 12) when British ships arrived, its officers were permitted to visit the local Governor and, with a group of prominent citizens, was convinced to adopt the liberal system: cheering in the streets were accompanied by salvos from the Fort.

In 1927 the fort's title was transferred to the Câmara Municipal of Horta, where it was to be demolished in order to make way for the coastal avenue (then in the planning stages and that supporters insisted would break the continuity of such a project).

[15] Critics at the time found that this project, which involved the construction of rooms for visitors, lounge and services, destroyed the existing historical structure: only the defensive exterior walls and chapel remained intact.

Originally, the fort was anchored on a rocky shoreline that extended into the harbour and surrounded by a narrow strip of beach sand on either side, with a small dock on its southern lateral wall (called theCais da Alfândega, or Customs wharf).