This stunning colonial city—also spelled Parati—is one of South America's gems. Giant iron chains hang from posts at the beginning of the mazelike grid of cobblestone streets that make up the historic center, closing them to all but pedestrians, horses, and bicycles. Until the 18th century this was an important transit point for gold plucked from the Minas Gerais—a safe harbor protected by a fort. (The cobblestones are the rock ballast brought from Lisbon, then unloaded to make room in the ships for their gold cargoes.) In 1720, however, the colonial powers cut a new trail from the gold mines straight to Rio de Janeiro, bypassing the town and leaving it isolated. It remained that way until contemporary times, when artists, writers, and others "discovered" the community and UNESCO placed it on its list of World Heritage Sites.

Paraty isn't a city peppered with lavish mansions and opulent palaces; rather, it has a simple beauty. By the time the sun breaks over glorious Paraty Bay each morning—illuminating the whitewashed, colorfully trimmed buildings—the fishermen have begun spreading out their catch at the outdoor market. The best way to explore is simply to begin walking winding streets banked with centuries-old buildings that hide quaint inns, tiny restaurants, shops, and art galleries.

Paraty holds Brazil’s largest literary festival, FLIP (Festival Literaria de Paraty) each July, followed in quick succession by the more raucous Festival da Pinga (Cachaça Festival), at which cachaça producers from around the country unveil their latest brews. The Carnival celebrations here are also a spectacle to behold, with costumed revelers covering themselves in mud to parade through the streets at the Bloco da Lama. Book well in advance if you plan to visit during the festivals.

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