The bay (rade) of Villefranche is one of the deepest natural harbours of any port in the Mediterranean Sea and provides safe anchorage for large ships from easterly winds.

Reaching depths of 320 feet (98 m) between the Cape of Nice and Cap Ferrat, it extends to the south to form a 1,700-foot (518 m) abyss known as the undersea Canyon of Villefranche about 1 nautical mile (1.9 km; 1.2 mi) off the coastline.

The city limits extend to the hills surrounding the bay climbing from sea level to an altitude of 1,893 feet (577 m), the highest point of Mont-Leuze, reflecting on land the features found offshore.

In 1295, Charles II, Duke of Anjou, then Count of Provence, enticed the inhabitants of Montolivo and surroundings to settle closer to the coastline in order to secure the area from pirates.

In 1543, the Franco-Turkish armies sacked and occupied the city after the siege of Nice, prompting Duke Emmanuel Philibert to secure the site by building an impressive citadel and a fort on nearby Mont Alban.

In 1744, a Franco-Spanish army under the Prince of Conti overran the Piedmontese regiments of Charles Emmanuel III of Sardinia at the Fort of Mont Alban in the heights above the town.

Since World War I, the United States Navy has called on a regular basis, making Villefranche the home port of the U.S. 6th Fleet from 1948 to February 1966, when French President Charles de Gaulle withdrew France from NATO and required U.S. forces to leave.

The decrease in population in recent years and especially in the 1990s can be attributed to the cost of real estate and an increase of part-time residents, who typically are not counted in the census.