The city of Lagoa evolved around its church. The date of its foundation is not known and only from 1773 onwards, when it by royal decree became a small town, its history is documented.
One does know that Estombar and Porches were important centres in the Islamic and medieval period and that Ferragudo had defence walls. The urban centre of Estombar was, in the Arab period, defended by a castle. The place was economically important because of the exploration of salt and the traffic on the river Arade. It was also the birthplace of the Muslim poet Ibne-Ammar (XI century) and of the rebel "O Remexido" (1796-1838) who, for several years, maintained the whole Algarve restless.
Fishing and the fish-canning industry brought, at the end of the XIX century and the first decades of the XX century, prosperity and dynamism to Lagoa.
Nowadays, due to its growing diversity of touristic and economic activities, Lagoa and its region play an ever-increasing role in the modern Algarve.