The settlement of this area on what is now the Spanish border dates back to the Bronze Age. This is evidenced by several megalithic monuments in the area. There were human settlements here on the hill even in Roman times and later under the Moors.
The town of Monsaraz was recaptured from the Moorish occupation in 1167 by the army led by the leader Geraldo sem Pavor. Monsaraz became a town in 1276 by King Afonso III. appointed. Monsaraz is one of the oldest and best-preserved historical places in the Alentejo and an old Templar domain. After the dissolution of the Templar Order in 1312, King Dinis and the Templar João Lourenço from Monsaraz planned to transfer the Templar Order to the Order of Christ. João Lourenço also became its first Grand Master, and under the new name of the Knights of Christ, the association transformed into Portugal's state-supporting elite group.
The town still has a continuous, closed city wall and many historical buildings have been preserved. Today the place is also responsible as a municipality for the villages of Matriz de Santa Maria da Lagoa, Santiago and São Bartolomeu. Until the Alqueva reservoir was completed, the town was located above the Guardiana River on the Spanish border.