It is believed that the Portuguese discovery of the island took place after the maps of Terceira had been drawn. Faial was probably named after the large amount of fire trees (faias-da-terra) that covered the island. The first official settlers, from Portugal and Flanders, must have arrived around 1465 as part of a failed expedition to find tin and silver ores. Two years later. Josse Van Huertere, a Flemish noble, returned to Faial attracted by the fertility of the soil and became, in 1468, the Portuguese donatory captain. Under a royal decree issued by King Afonso V, he brought more people from Flanders to live in the Flamengos valley before moving to Horta.
The foreigners introduced woad. The export of this dye plant and of wheat was the main pillar of the economy during two centuries. In 1583, when Faial was occupied by the Spanish and pirates were attacking it, mainly french and english, the island witnessed a period of dilapidation of its wealth and heritage. The 1672-73 volcanic eruption also causes the destruction in the northwest of the island.
During the 17th century, after the Portuguese Restoration of the throne, there were better times as Horta, with its sheltered harbour, became a navigational stopover between Europe and the American Continent. Wine and spirits, made from the grapes of the islands of Pico, São Jorge and Graciosa, were exported to mainland Portugal, Europe and the British colonies. During the 18th century, the island was involved in the production and the export of oranges, which was then the main financial source of the archipelago. The harbour of Horta enjoyed a golden era, supplying the steam boats crossing the Atlantic Ocean and the North American whaling fleets.
During the 19th century, infesting diseases decimated the vineyards and the orange groves within one decade. But given its location, the island became a crucial centre for telecommunications. The transmission of information between North America and Europe was done via submarine cables that passed by Horta, whose first station dates back to 1893. Successively, various international companies installed submarine cables linking the continents via Faial. Additionally, the island gained a new dimension in early 20th century when the Horta Weather Observatory opened in 1915.
Aviation also took advantage of the privileged location of Faial for the stopover of the first sea planes crossing the North Atlantic. The first one stopped in Horta after World War I in 1919. During the 1930s and 40s, the airlines of Germany, Britain, France and North America chose Faial as the site for alighting their sea planes.
To this day Faial has benefited from its geographic location. The Horta Marina, opened in 1986, is one of the world’s most famous harbours. With the establishment of the autonomic model of government, the city of Horta became the seat of the Regional Parliament of the Azores and followed the regional economic trend, becoming a services-based economy.