The rally's origins date to 1965, when local enthusiasts staged the Volta à Ilha de São Miguel, six years after the establishment of the Rali Vinho da Madeira on the island of Madeira. The early event was a purely local affair, but the challenging volcanic roads of São Miguel, combined with the island's striking landscape, gave it a character that would eventually attract international attention. Despite the island's remote position — more than 1,500 kilometres from the Portuguese mainland — the event became part of Portugal's national championship in the early 1970s.
The rally achieved full international status in 1992 when it was first included in the European Rally Championship calendar. That inaugural international edition was also the first won by a non-Portuguese driver, France's Yves Loubet, who broke a long run of home dominance. Portuguese drivers resumed control in subsequent years, with Fernando Peres becoming the event's most successful competitor in the international era, winning seven times. Carlos Bica has also won on four occasions.
The event was demoted to the European Rally Cup West in 2004 and dropped from that series entirely in 2006, but it regained international status in 2008 through inclusion in the European Rally Cup South series. The following year, 2009, brought participation in the Intercontinental Rally Challenge. When the IRC folded after the 2012 season, the European Rally Championship returned to the Azores in 2013.
Unlike most Atlantic island rallies — the Rali Vinho da Madeira and the Rally Islas Canarias are its closest geographical peers — the Rallye Açores is a gravel event, not a tarmac one. The roads on São Miguel are narrow and rough, shaped by the island's volcanic terrain, with surface conditions that change rapidly in response to the Azores' famously unpredictable weather. The combination of remote location, technical gravel stages, and Atlantic weather patterns gives the rally a personality that regular competitors describe as uniquely demanding.
The Rallye Açores has shown exceptional longevity for a regional event, surviving multiple changes in international sanctioning structures across more than five decades. Its isolation — further from the Portuguese mainland than any other round of the national championship — has never prevented a strong entry, and the event's repeated returns to international calendars after periods of demotion reflect its standing among organisers and competitors alike. The Azores championship it spawned continues to run annually, ensuring that the tradition of the original Volta à Ilha de São Miguel endures at every level of the sport.