The name of Pernambuco State's original capital means "beautiful," and this must have been what came to mind when the first Europeans stood atop the forested hills and gazed down at the ocean and beach spread out before them. Today the town's natural beauty is complemented by colonial buildings painted in a rainbow of colors, making it a stunning slice of the old Northeast.

Founded by the Portuguese in 1535, Olinda was developed further by the Dutch during their brief turn at running Pernambuco in the 1600s. The narrow cobblestone streets of this UNESCO World Heritage Site curve up and down hills that, at every turn, offer spectacular views of both Recife and the Atlantic. The scenery is just as nice up close: many houses have latticed balconies, heavy doors, and stucco walls. The zoning laws are strict, resulting in a beautiful, compact city that artists, musicians, and intellectuals have made their own.

The City Center is hilly but fairly easy to explore by foot. You may want to hire a guide to help provide some historical background on the city and its principal sites. Look for the official guides (they have ID cards and bright orange or blue T-shirts) who congregate in the Praça do Carmo. They are former street children, and half the R$45 fee for a full city tour goes to a home for kids from the streets.

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