The civil parish has been permanently associated with the Marian apparitions that were witnessed by three shepherd children at the Cova da Iria in 1917. The Catholic Church later recognized these events as "worthy of belief". A small chapel was built here in honor of Our Lady of Fátima, beginning in 1918, and a statue of her installed; the chapel and statue have since been enclosed within a large shrine and basilicas. Associated facilities, including a hotel and medical facility, have also been built over the decades at this site. Each year thousands of pilgrims visit the Sanctuary of Our Lady of Fátima.
The name of the town and parish is a rendition of the Arabic given name Fátima ( فاطمة Fāṭimah). (Fatimah is the namesake of Fatimah bint Muhammad, a daughter of the prophet of Islam Muhammad.)
Fátima was said to be the name of a Moorish princess kidnapped by a knight, Gonçalo Hermigues, and his companions. Hermigues took her to a small village in the Serra de Aire hills, in the recently created Kingdom of Portugal. According to the Western Catholic narrative, Fatima fell in love with her kidnapper and decided to convert to Christianity in order to marry him. She was baptized and given a Christian name, Oureana.
Arab sources, however, claim that Fátima was forced into Christianity, as were most Reconquista captives. There is no documentary evidence to support either scenario of such a conversion.
The parish was founded in 1568, when it was annexed by the Collegiate of Ourém (Portuguese: Colegiada de Ourém). For centuries, most of the villagers kept herds of sheep and depended also on subsistence farming.
Since the early 20th century, Fátima has been associated with events in which three local children, Lúcia dos Santos and her cousins, Francisco and Jacinta Marto, saw visions of a woman known as Our Lady of Fátima, since believed to be the Virgin Mary. On 13 May 1917, whilst guarding their families' sheep in the Cova da Iria, the children first saw an apparition of a "lady dressed in white" and shining with a bright light.
The three shepherd children were born in Aljustrel, a small hamlet about 1 kilometre (0.62 mi) from Fátima. To the west, near Aljustrel, is Loca do Cabeço, a smaller agglomeration of rocky outcroppings where, in 1916, an angel appeared twice to the three children. The angel visitation was not recounted until the 1930s, when Lucia dos Santos (who had joined a convent, and become Sister Lucia) began publishing her memoirs.
The children saw the Marian apparition on six occasions; they said the last would be 13 October 1917. An estimated 70,000 pilgrims went to the site for the last prophesied apparition in October. Some of them reported what has been referred to as the Miracle of the Sun, when some observers reported it appeared to be behaving unusually.
The local bishop investigated the events and determined that the apparitions were worthy of belief. The site was marked by a cross erected by locals. In 1918 they built a small chapel, built from rock and limestone and covered in tile. It was 3.3 metres (11 ft) by 2.8 metres (9.2 ft) length, and 2.85 metres (9.4 ft) height. It became a centre for Marian devotion, receiving names such as a fé. Fátima, cidade da Paz ("the faith of Fátima, City of Peace"), or Terra de Milagres e Aparições ("Land of Miracles and Apparitions").
The chapel has since been enclosed within a large basilica and sanctuary, part of a complex including a hotel and other facilities. In 1930, the statue of Our Lady in the Chapel of Apparitions was crowned by the Vatican.
Francisco died in 1919 and Jacinta in 1920, during the international Spanish flu pandemic. Lucia dos Santos became a nun and lived until 2005. The two who died young were beatified on 13 May 2000 by Pope John Paul II, and were canonised by Pope Francis on 13 May 2017, the hundredth anniversary of the first apparition.
The construction of the sanctuary and the steady visits by pilgrims stimulated local development. In addition to construction of a large shrine, basilica, and sanctuary, the complex includes a hotel and other facilities. The town of Fátima was elevated to the status of city on 12 July 1997.
In the early 21st century, numerous residents of the parish (primarily from its business sector) worked to have Fátima designated as an independent municipality. The project, led by Júlio Silva, engineer and ex-president of the Junta de Freguesia (Parish Council), was vetoed on July 2003 by President of Portugal Jorge Sampaio.
Fátima is located on the Estremenho Limestone Massif, on the flanks of the Serra de Aire, approximately 300 metres (980 ft) above sea level. The geology of the Serras de Aire and Candeeiros gives rise to an arid landscape with a rocky ground interspersed with limestone outcroppings. There are various geological formations in the region including sinkholes, uvalas and polje (like the Polje de Minde-Mata), as well as karst grottoes, caves with stalactites and stalagmites, in addition to lapiez fields.
The climate is characterized by heavy precipitation during the winter, with approximately 1,400 millimetres (55 in) annually, and warm, dry summers.
The trees in this area are primarily dominated by holly oak (Quercus ilex), Portuguese oak (Quercus faginea), strawberry trees (Arbutus unedo), buckthorn and olive trees, all of which are resistant to the precipitation extremes of the climate. There are also areas of savannah, strips of land bounded by walls of loose stone.
The parish contains the following localities: Aljustrel, Alvaijar, Amoreira, Boleiros, Casa Velha, Casal Farto, Chã, Charneca, Cova da Iria, Eira da Pedra, Fátima, Giesteira, Lomba da Égua, Maxeira, Moimento, Moita Redonda, Moitas, Montelo, Pederneira, Poço Sodo, Ramila and Vale de Cavalos.
The economy of the town relies on religious tourism because the world devotion through Our Lady of Fátima attracts millions of Christian pilgrims. The locals have numerous shops and stalls devoted to the sale of religious articles and souvenirs. In addition, services for tourists, hotels, restaurants and other retail also benefit from the visitors. Other economic activities in the region include: marble sculpturing, saw-milling, carpentry, civil construction, commerce, and services.
The Sanctuary of Our Lady of Fátima, in Cova da Iria, is the principal focus of all visitors. Annually, at least five millions of Catholic pilgrims regularly fill the country roads leading to the Marian shrine. Numbers can reach hundreds of the thousands on 13 May and 13 October, the most significant dates of the apparitions in Fátima.
Fátima's major sports club is the Sport Center of Fátima, currently in Portuguese football's second tier, the LigaPro.