The origin of this place name is related to one of the settlers of Madeira, Diogo de Barcelos. He was a silk merchant who was granted land in that area for cultivation and started growing mulberry trees, an important plant to feed silkworms.
Over the years, attracted by the location, the view, and the economic opportunities, the surrounding population grew. In part, this growth was fueled by the construction of a road in 1917, which made access to the area easier. As a result, it became a popular destination for both national and foreign visitors at all times.