Until 1800 the region of São Pedro and its enclave was virgin forest. The first known people to set foot in Águas de São Pedro territory were, as in most municipalities in the São Paulo countryside, bandeirantes seeking precious stones, especially gold, opening many roads and routes in the dense forest. One of these routes, called Caminho do Picadão (Way of the Forest Trail), started in Itu, passed through Piracicaba and advanced towards the hinterlands of Araraquara. For years, many farms were established in the region, until in 1883, São Pedro was detached from Piracicaba and became politically independent.

The economy at that time was based on coffee production, and many Italian families settled in these regions to work under partnership contracts to replace the slave labor. In this way, the Italian immigrant Angelo Franzin arrived in Brazil in 1887, going to work on a farm called "Recreio", owned by João Rezende da Cruz; just a year later Franzin would run other farms, like Santa Rita, Santa Eulália and Rosário. After many years of work, he purchased land with his brother Jácomo and decided to try coffee planting. The first properties they acquired were the farms Palmeiras and Limoeiro, followed by the lands of Floresta Escura, Gonçalves, Tuncum and Araquá, as well as houses, lots, and two machines to process coffee beans.

In the 1920s Júlio Prestes, the governor of São Paulo, began exploration of the oil prospecting area in São Pedro. His efforts failed to find petroleum, and the equipment was abandoned, but still gushing out mineral water. Subsequently, other attempts were made to find oil at greater depths, and again no oil was found. One oil rig structure still remains; it is called the Torre de Petróleo Engenheiro Ângelo Balloni (Engineer Ângelo Balloni Oil Tower).

Years later, in 1934, Franzin, owner of some of the land in the area, built a simple bath house (currently known as the "Youth Fountain") in one of the springs where he bathed, the waters of which had a characteristic smell of sulfur. A year later, a group of townspeople bought a lot measuring 100,000 square metres (1,076,400 sq ft) around the original wood bath house, where they built a health resort. It was composed of twelve masonry bathtubs. In that same year, Octavio Moura Andrade decided to build a spa there, giving it the name of Caldas de São Pedro, and, along with his brother, Antonio Joaquim de Moura Andrade, established the company Águas Sulfídricas e Termais de São Pedro S.A. (Saint Peter Thermal and Sulphydric Waters S.A.).

For four years, the Institute for Technological Research (IPT) of the University of São Paulo conducted a series of studies of those waters. Generally, water from great depths has a high concentration of substances that may be harmful to human beings, and its pH may not be suitable for bathing. In 1940 the results were published in Bulletin 26 of the IPT. The waters were deemed good for bathing, and their medicinal properties were studied by Professor João de Aguiar Pupo, Dean of the Faculty of Medicine of São Paulo.

Recognizing the importance of the thermal springs in the region, the São Paulo State Government on 19 June 1940 founded the Estância Hidromineral e Climática de Águas de São Pedro (Hydromineral and Climatic Spa of Águas de São Pedro). Despite this, the city celebrates its birthday on 25 July, the date in 1940 of the founding of the first major building in the city, the Grande Hotel (now Grande Hotel São Pedro). The municipality of Águas de São Pedro was incorporated by State Law No. 233, of 24 December 1948.

To promote the development and exploitation of the medicinal waters in an economically viable way, Octavio Moura Andrade conceived and designed a city focused on hydrotherapy and residential purposes: a spa town. Águas de São Pedro was created as a hydromineral spa, fully planned and aiming to serve both those who needed treatment and tourists looking for fun and leisure. The urban planner Jorge de Macedo Vieira was chosen to integrate the use of space with the mineral waters, topography, soil, and climate, conducting a two-year-long detailed study of the area prior to designing the city. It was only in 1940 that the project was completed, being recorded in the Real Estate Registry Office of the District of São Pedro under number 1, in accordance with the requirements of the Brazilian Federal Decree-Law No. 58, of 10 December 1937.

As part of this project several buildings were constructed, including a large luxury hotel to welcome tourists, as well as a casino, one of the first in the country with activity regulated by the government. A sanitation system was constructed, with the technical firm Saturnino de Brito from Rio de Janeiro hired to study and control the sanitation system in the area around the Grande Hotel. Several roads were reconstructed, including an 8-kilometre (5 mi) road connecting São Pedro to the springs that can handle the traffic of heavy vehicles; construction of an airport (now São Pedro Airport) in a 40-alqueire area (239.2 acres, or 96.8 ha) with four runways, a departure lounge, electricity, telephone, running water, hangar and refueling station. Energy infrastructure was improved. Because São Pedro's power grid was in disrepair, a private power line was built connecting São Pedro to the construction works of the spa, and in the Grande Hotel was installed an emergency powerhouse with two diesel generators capable of supplying the hotel and the town.

After the opening of the spa, tourism gained momentum. The city became one of the members of the Região Turística da Serra do Itaqueri (Touristic Region of the Itaqueri Ridge), composed of twelve municipalities. With the large influx of tourists, the need developed for improvements in the commercial sector, prompting renovation of the Rua do Comércio (Trade Street, old nickname for the street João Batista Azevedo).

In 2013 a group of companies led by Telefônica Vivo announced plans to make Águas de São Pedro the first digital city in the country. In the first stage of the project, the telephone wiring of the city was replaced, changing from copper to optical fiber. An antenna, providing 4G technology, and security cameras were installed; tablets were distributed to students of the municipal school; presence sensors in a smart car parking system and a smart street lighting system were installed, reducing energy consumption. At the end of 2015, though continuing to provide services to the community, Telefônica Vivo transferred managing responsibility to the city government. The second stage would begin in 2016, with the installation of interactive kiosks in public places, the training of teachers to work with new technologies, and the scheduling of medical appointments over the Internet, but ended up not being implemented. In addition, most of the residents went on to complain that most of the services promised no longer exist or do not work.

The municipality of Águas de São Pedro covers 3.612 square kilometres (1.4 sq mi), the second-smallest Brazilian city in area, only larger than Santa Cruz de Minas. It represents 0.0015% of the state territory and 0.0004% of the area of southeastern Brazil. The municipality does not have a rural area, only an urban perimeter.

Águas de São Pedro is divided into four neighborhoods: Jardim Jerubiaçaba (Garden Jerubiaçaba; Jerubiaçaba means "loyalty" in Tupí–Guaraní) in the northeast, Jardim Iporanga (Garden Iporanga; Iporanga means "beautiful river" in Tupí–Guaraní) in the east, Centro (Center), and Jardim Porangaba (Garden Porangaba; Porangaba means "nice view" in Tupí–Guaraní) in the south.

The city is located at latitude 22°35'50.422" south and longitude 47°53'02.309" west, and at a distance of 184 kilometres (114 mi) northwest of the São Paulo state capital. Its only adjacent municipality is São Pedro, from which is one of the four enclaves of Brazil, besides Arroio do Padre, Ladário and Portelândia.

The geomorphology of the area of Águas de São Pedro is characterized by reliefs of low, soft hills – separated by valleys without major river plains – and it is slightly rugged, with sites that only rarely exceed 200 metres (656 ft) of unevenness. The municipality is at an altitude of 515 metres (1,690 ft) above sea level, and located in a geographic region called the São Paulo State Peripheral Depression, near the border with the Western Plateau, in an area of basaltic cuestas.

Águas de São Pedro is located in the so-called Piramboia Formation (Piramboia means "snake fish" in Tupí–Guaraní), one of the five stratigraphic subdivisions of the Paraná Basin, all formed at different periods, in which Triassic and Early Cretaceous ages sediments predominate. The sediments are composed of thin to medium arenites, white-orange to reddish in color, and with tangential cross-bedding in a mid-size to large base; these features are indicative of temporary rivers in the past in a semiarid environment.

The city is situated in the central part of the Medium Tietê Zone, which occupies about 15,000 square kilometres (5,792 sq mi), or two-fifths of the total area of the Peripheral Depression. It is bounded by Araquá River (Araquá means "hole of the world" in Tupí–Guaraní), which has a general north–south route, and also by the Limoeiro and Das Palmeiras lakes. The region where Águas de São Pedro is located is also part of the watershed of the Piracicaba River. The Piracicaba basin extends over an area of 12,568.72 square kilometres (4,853 sq mi), covering the southeastern state of São Paulo and the southern end of Minas Gerais.

According to the Köppen climate classification, Águas de São Pedro has a tropical savanna climate (Aw), close to the humid subtropical climate (Cfa), with a decrease in rainfall during winter, an annual average temperature of 22.4 °C (72 °F), dry and mild winters (with occurrence of light frosts on a few days of the season), and rainy summers with high temperatures. The hottest month, February, has an average temperature of 25.2 °C (77 °F), with an average maximum of 30.9 °C (88 °F) and a minimum of 19.5 °C (67 °F). The coldest month, July, has an average temperature of 18.7 °C (66 °F), with 25.9 °C (79 °F) and 11.4 °C (53 °F) being the maximum and minimum averages, respectively. Fall and spring are transitional seasons.

The total annual rainfall is measured at 1,307.5 millimetres (51 in), and July is the driest month, with 26.7 mm (1 in) of precipitation. In January, the wettest month, the average is 221.5 mm (9 in). Since the early 2000s, however, hot and dry days during winter have been increasingly frequent not only in Águas de São Pedro, but also in much of the state of São Paulo, often surpassing 30 °C (86 °F), especially between the months of July and September. During the dry season and in the long veranicos in the middle of the rainy season, there have been increasing reports of smoke from burned-over land in sugarcane plantations and scrubland, mainly in the rural area around the city, leading the federal court to prohibit such activity in the region. Hailstorms are not common in the city, but one of the most recent occurred on 17 February 2010.

The original vegetation in the area of Águas de São Pedro was the cerrado, a mixed formation classified into two strata: the upper stratum, composed of trees with variable height of from 3 to 6 metres (10 to 20 ft), with crowns often sparse and spaced apart, and the lower stratum, composed of continuous coverage of grasses and other plants less than a meter tall, and trees with trunks and twisted and gnarled branches, thick bark, large leaves, and thorns. This natural vegetation, however, is quite devastated. Today the vegetation is predominantly planted. The city has 69.58 hectares (172 acres), 17.40% of its total area, of reforested areas, mostly concentrated in Dr. Octavio Moura Andrade Park in the northwest, and 2.06 hectares (5 acres), or 0.69% of its total area, of floodplain vegetation, all concentrated on the banks of the Araquá River in the southeast portion of the municipality.

As of the 2010 Brazilian Census recorded by the Brazilian Institute of Geography and Statistics (IBGE), Águas de São Pedro has a population of 2,707. Of that total, 2,361 inhabitants are White (87.22%), 279 are Pardo (brown) (10.31%), 41 are Black (1.51%), and 26 are Asian (0.96%). It is the 594th most populous city in the state, and has a population density of 749.45 inhabitants per square kilometer. Of the total population, 1,262 inhabitants were men and 1,445 were women.

Half of the housing units of the city (50.6%) are owned by vacationers. Many people stay in the municipality only on weekends and holidays and have their homes just for recreation and as a real estate investment.

In the year 2000, 305 people (16.2% of the city's population) stated having some type of disability, almost two percent higher than the national average.

The Municipal Human Development Index (MHDI) of Águas de São Pedro, is at 0.854, considered very high by the United Nations Development Programme (UNDP), and is the second highest in the state of São Paulo, as well as the second highest in Brazil. Considering only education, the index is at 0.825, compared to 0.637 for Brazil as a whole; the longevity index is 0.890 (0.816 for Brazil); and the income index is 0.849 (0.739 for Brazil). The city ranks high in the majority of indicators, and above the national average in all indicators, according to the UNDP.

The Gini coefficient, which measures social inequality, is 0.40, on a scale in which 1.00 is the worst and 0.00 is the best. The incidence of poverty, measured by the IBGE, is measured at 5.91%, on a scale in which the lower limit is 0.17% and the upper limit is 11.65%; and the incidence of subjective poverty is measured at 4.24%.

As with the cultural variety in Águas de São Pedro, there are various religious manifestations present in the city. As of the 2010 Brazilian Census, the population had 1,836 Roman Catholics (67.81%), 435 Evangelics (16.07%), 228 people without religion (8.41%), 125 Spiritists (4.63%), 29 people with religion either undetermined or multiple belonging (1.08%), 13 Jews (0.47%), 9 Orthodox Catholics (0.33%), 7 Spiritualists (0.24%), 6 Jehovah's Witnesses (0.23%), 6 people with new Eastern religions (0.23%), 4 people of other Christian religion (0.15%), 3 Buddhists (0.12%), 3 people with esoteric traditions (0.11%), and 3 people from the Church of Jesus Christ of Latter-day Saints (0.12%).