As part of its administrative role, the settlement received its primary lighthouse between 14, when it was elevated to the status of vila and municipal seat.Funchal became an important transfer point for European commercial interests; many sailors and merchants located in Funchal in order to take advantage of the transient conditions of port.
By the end of the century, fronting the Order of Christ, D.
Manuel, Duke of Beja, expanded the support of the local community; he ordered the construction of the administrative Paços do Concelho and the Paços dos Tabeliães (completed in 1491), raised the construction of a church (began in 1493 and later raised to cathedral in 1514), and finally the construction of a hospital and customs-house in the village.
In 1508, it was elevated to the status of city by King Manuel I of Portugal, and in 1514 (on completion of the Sé Cathedral) the bishopric was headquartered in Funchal.
The island, and Funchal specifically, were vulnerable to privateer and pirate attacks.
In September 1566, French corsairs under the command of Bertrand de Montluc, a gentleman in the court of Charles IX of France and second-son of Field Marshal Blaise de Montluc departed from Bordeaux with a force of 1200 men, on a small fleet of three main ships and eight support craft. When the news was relayed to the settlements on Madeira and the villas of Machico and Santa Cruz the citizenry armed themselves for the inevitable.
In Funchal, the governor, Francisco de Sales Gonçalves Zarco da Câmara, did not take any action that could be construed as hostile.
Meanwhile, the armada anchored off the beach of Formosa, disembarked a contingent of 800 men that marched towards the city in three columns, encountering no resistance until the main bridge in São Paulo.
At the bridge the privateers encountered a force from the small fort, with a few small-caliber pieces, which were quickly routed in confusion.
making it the 6th largest city in Portugal, and has been the capital of Madeira for more than five centuries.