The first settlers arrived in Madeira between 1420 and 1425. Under the leadership of the 1st captain of Funchal, João Gonçalves Zarco, the first inhabitants soon had to organize themselves and set up a municipal centre, which later on, around 1453, would be elevated to Village, by King D. Afonso V charter.
When Duke D. Manuel became the administrator of the Order of Christ, and with the growth of Funchal through the income of the flourishing sugarcane production, it was decided to build a political and administrative centre. The chosen placed was Campo do Duque, where the first experiments as for the acclimatization of the sugarcane stocks brought from Sicily had been carried out . This space was set aside by the provision of 4 June 1485, which aimed for the construction of "a large church, a square and municipal house".
The first construction to appear in the former Campo do Duque was the house of the municipal council, with the court for the notaries and the receiving rooms. The construction started around 1486 and was finished in 1491. Later, around 1500, the construction of the large Church started and in 1508, by letter of King D. Manuel, dated 21st August, the village of Funchal was raised to the category of city, the first of the vast Portuguese expansion on the 16th century.
The old municipal installation of the 15th century, in time, was no longer suitable for the needs of a city such as Funchal. Thus, the seat of city government moved from one building to another and in the first half of the 19th century, it came to be installed in the palace where it still operates today.
The Carvalhal Esmeraldo Palace was built by Francisco Antonio da Câmara Leme in 1758, who recuperated previous constructions. It subsequently passed through the hands of various owners and tenants, and in the beginning of the 19th century, the owner was D. Joana Teresa, daughter of Joana de Carvalhal and her husband, the sergeant-at-arms of Funchal, Francisco Roque de Albuquerque Figueiroa. A short time later, Funchal City Council was installed in the building, which was acquired in 1883.
In 1940, under the mayoralty of Dr. Fernão de Ornelas, the building and its surroundings were extensively remodeled, resulting in the building as we know it today, which faces a large square dominated by a fountain, the overall project being the responsibility of the architects Raúl Lino and Carlos Ramos
Funchal City Hall is a "quadrangle", with a small inner garden patio and a two-storey facade facing westward, with exposed ashlar stone pilasters on each side, topped by pinnacles.
On the side facing Largo do Município, there is a large gateway with coats of arms, which connects to a floor with services and the main floor with its 11 balcony windows with verandas and Baroque ashlar frames.
From the south facade rises an impressive three-storey "sea view" tower, the upper storey marked by sets of triple balcony windows with verandas, inset pilasters in exposed ashlar stone and trimmed with eaves on a cornice that is also made of ashlar stone. On the north façade, facing the Court House we have a low-relief sculpture of St. James the Less, the saint patron of the city, which was executed by the sculptor Antonio Duarte in 1944.
The main entrance is through an atrium paved in marble, with a central ashlar arch leading to the inner patio, flanked on each side by other arches that give access to the upper floors. The marble statue of Leda and the Swan, dated 1880, was previously located in the D. Pedro V municipal market, was placed on a pedestal with a fountain in the central patio. In a council meeting of 27 November of the previous year, this work was commissioned from the stone cutter Germano José Salle, whose workshop was in Lisbon at Rua do Arsenal, 26.
Access to the upper floors is by means of flanks of elaborate stairs under ashlar arches and stone-paved patios. The entire area of the entrance and the accesses is decorated with panels of blue-and-white ceramic tiles, signed by Batisttini and manufactured at the Factory of Maria de Portugal in 1940.
The Nobel Salon which looks out over Praça do Município is decorated in the revivalist style of the 40's, with Baroque-style furnishings, displaying an important set of portraits of the last Kings of Portugal of the 19th and 20th centuries, as well as an allegory of the Funchal City Council, executed by the Madeiran artist Alfredo Miguéis in 1940, who also did the painting on the ceiling of the central main hall.
To the south is the meeting room of the Municipal Assembly, decorated with Funchal coat of arms, flanked by the city's saint patrons - Santiago Menor e São Roque, painted by Rui Carita in 1987, two drawings and two oil paintings by Max Römer, done in 1927, representing old views of the city; and the old flag of the City Council from the end of the 19th century.
To the north is the Council meeting room, with a portrait of the former President of the Republic, General Óscar Fragoso Carmona, who was received in the Council in 1938 and, between this room and the central hall, there is a small sitting room, with portraits of figures linked to the city government, done by Alfredo Miguéis in 1940 and 1941: the former civil governor, Councilor José Silvestre Ribeiro (1807; 1891), the diplomat Marquis of Funchal (Domingos António de Sousa Coutinho, who died in 1832), the writer Manuel Pimenta de Aguiar (1765; 1855) and the bacteriologist Dr. Luís da Câmara Pestana (1863; 1899).