Settlement

The first settlers began colonizing the islands around 1420 or 1425; the three Captains-major had led the first settlement, along with their respective families, a small group of minor nobility, people of modest conditions and some prisoners, who could be trusted to work the lands. To gain the minimum conditions for the development of agriculture, they had to rough-hew a part of the dense forest of laurisilva and to construct a large number of canals (levadas), since in some parts of the island there was excess water, while in others water was scarce. During this period, fish constituted about half of the settlers' diet, together with vegetables and fruits cultivated from small cleared parcels of land. Initially, these colonists produced wheat for their own subsistence, but later the quantity cultivated was sufficient to begin exporting wheat to continental Portugal. However, when grain production began to fall, the ensuing crisis forced Henry the Navigator, as principal benefactor of the islands, to plant other commercial crops. 

The planting of sugarcane, and later Sicilian sugar beet, allowed the introduction of the "sweet salt" (as sugar was known) into Europe, where it was a rare and popular spice. These specialized plants, and their associated industrial technology, created one of the major revolutions on the islands and fueled Portuguese industry. The expansion of sugar plantations in Madeira began in 1455, using advisers from Sicily and financed by Genoese capital (it would become an integral part of the island economy until the 17th century). The accessibility of Madeira attracted Genoese and Flemish traders who were keen to bypass Venetian monopolies. Sugarcane production was the primary engine of the island's economy, increasing the demand for labour. Slaves were used during portions of the island's history to cultivate sugar cane, and the proportion of imported slaves reached 10% of the total population of Madeira by the 16th century.

In 1617, Algerian pirates, having enslaved Europeans along the Mediterranean coasts, captured 1,200 men and women in Porto Santo.

After the 17th century, as sugar production shifted to Brazil, São Tomé and Príncipe and elsewhere, Madeira's most important product became its wine. The British occupied Madeira as a result of the Napoleonic Wars, a consented occupation starting in 1807 and concluding in 1814 when the island was returned to Portugal. Nevertheless, the island was a British Crown Colony for four months, and Britain had intentions of keeping it after the Napoleonic Wars, owing to its strategic position, but plans for its permanent annexation were abandoned shortly after the start of the occupation.