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The name of São Sebastião was given to the main island of the archipelago by Américo Vespucio, the italian navigator under the service of the Crown of Portugal, in charge of registering and naming the places that he would come to know on the brazilian coast.

The Island of São Sebastião, with 330 square kilometers holds about fifteen thousand inhabitants on 36 kms of cristal clear beaches, almost 400 waterfalls and high mountains such as the Pico do Baepi.

The navigator came by the island in 1502. It was a resting place for the Tupinambá indians who called it "Ciribaí" meaning "calm place". With the portuguese ships also came pirates who taking advantage of the island's strategic location made it their safehaven and hiding place for treasures. Until today there are dreamers searching for hidden fortunes in places such as the Saco do Sombrio inlet on the east coast of the island.

With the concession of a plot of land in 1608 to a certain Diogo de Unhate, the settlement began. Soon there were cultures of tobacco, banana, sugar cane and sugar and brandy mills beside the growing of the cassava root still done today by the local caiçaras.

By the end of the seventeenth century and the beginning of the eighteenth, the island became quite prosperous with mills and trade. The upgrading of the settlement to the category of a village would only occur in September 3, 1805, when it was given the name of Villa Bella da Princeza (Beautiful Village of the Princess). At that time it had 3000 citizens.

Chasing the pirates away, the island was transformed into a arrival point of slaves that were smuggled bi midst of the eighteenth century when the slavetrade was already banished by law. The ships anchored at the Castelhanos Bay and the slaves were forced to cross the island to be sold on the mainland. The abundant workforce of slaves resulted in an economic peak for Ilhabela. More than thirty sugar and brandy mills proliferated around the island, the original flora giving place to sugar cane plantations.

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