The town is located on the intersection of Routes 14 and 42, about 55 kilometres (34 mi) east of the city of Durazno.

Carmen was founded on 10 June 1874 by a decree of President of Uruguay, José Eugenio Ellauri.

A principal contribution to the town's economic development was the carpentery industry, as well as the wines produced by André Faraud in the beginning of the 20th century.

On 29 April 1975, its status was raised to "Villa" (town) by the Act of Ley Nº 14.363.

[3] Source: Instituto Nacional de Estadística de Uruguay[4] Parque Francisco Davant is named after Francisco Davant, a local political figure distinguished by his sponsorship of tree planting, serves local residents and tourists.