The name of the town derives from the Arabic name for a local Moorish princess. Having been captured by Christian forces during the Islamic occupation of Portuguese territories in 1158, she was betrothed to Gonçalo Hermigues, the Count of Ourém, after being converted to Catholicism and gaining a new baptismal name, Oureana.

The town's claim to fame is the tiny shrine dubbed the Sanctuary of Fátima, which was built to commemorate the events of 1917. That year, three peasant children reportedly had a vision of the Virgin of the Rosary. They experienced the apparitions in a pasture called the Cova da Iria, close to the village of Aljustrel, a mile from Fátima. 

As the sanctuary began to attract hordes of believers, the shrine was converted into a structure of a correspondingly large scale. Spectacular torchlight processions in the evening are among the site’s highlights. The pilgrims gather in the Cova, a huge esplanade containing the renowned small chapel where the Virgin is said to have appeared to the children. There are a considerable number of shops and stalls nearby, selling various devotional articles.

The giant Fatima Basilica rises on the far side of the esplanade. This neo-Classical structure has a 65-metre-high central tower, the construction of which was commenced in 1928. Flanked by colonnades linking it with the extensive convent and hospital buildings, the basilica also contains the tombs of two of the three peasant children, Francisco Marto and Jacinta Marto, who died in 1919 and 1920 respectively, and were both beatified in 2000.