The archipelago includes the islands of Madeira, Porto Santo, and the Desertas, administered together with the separate archipelago of the Savage Islands. Roughly half of the population lives in Funchal. The region has political and administrative autonomy through the Administrative Political Statute of the Autonomous Region of Madeira provided for in the Portuguese Constitution. The region is an integral part of the European Union as an outermost region. Madeira generally has a mild/moderate subtropical climate with mediterranean summer droughts and winter rain. Many microclimates are found at different elevations.

Madeira, uninhabited at the time, was claimed by Portuguese sailors in the service of Prince Henry the Navigator in 1419 and settled after 1420. The archipelago is the first territorial discovery of the exploratory period of the Age of Discovery.

Madeira is a year-round resort, particularly for Portuguese, but also British (148,000 visits in 2021), and Germans (113,000). It is by far the most populous and densely populated Portuguese island. The region is noted for its Madeira wine, flora, and fauna, with its pre-historic laurel forest, classified as a UNESCO World Heritage Site. The destination is certified by EarthCheck. The main harbour in Funchal has long been the leading Portuguese port in cruise ship dockings, an important stopover for Atlantic passenger cruises between Europe, the Caribbean and North Africa. In addition, the International Business Centre of Madeira, also known as the Madeira Free Trade Zone, was established in the 1980s. It includes (mainly tax-related) incentives.

Plutarch in his Parallel Lives (Sertorius, 75 AD) referring to the military commander Quintus Sertorius (d. 72 BC), relates that after his return to Cádiz, he met sailors who spoke of idyllic Atlantic islands: "The islands are said to be two in number separated by a very narrow strait and lie 10,000 furlongs [2,000 km] from Africa. They are called the Isles of the Blessed."

Archaeological evidence suggests that the islands may have been visited by the Vikings sometime between 900 and 1030.

Accounts by Muhammad al-Idrisi state that the Mugharrarin ("the adventurers" – seafarers from Lisbon) came across an island where they found "a huge quantity of sheep, the meat of which was bitter and inedible" before going to the more inhabited Canary Islands, in Spain. This island, possibly Madeira or Hierro, must have been inhabited or previously visited by people for livestock to be present.

During the reign of King Edward III of England, lovers Robert Machim and Anna d'Arfet were said to have fled from England to France in 1346. Driven off course by a violent storm, their ship ran aground along the coast of an island that may have been Madeira. Later this legend was the basis of the naming of the city of Machico on the island, in memory of the young lovers.

Madeira appears in several medieval manuscripts, including the Book of Knowledge of All Kingdoms from the early 14th century, the Medici-Laurentian Atlas from 1351, the Soleri Portolani from 1380 and 1385 and Corbitis Atlas from the late 14th century. These texts refer to Madeira as Lecmane, Lolegname, Legnami (the isle of wood), Puerto or Porto Santo, deserte or deserta, and desierta. It is widely accepted that knowledge of these Atlantic islands existed before their better-documented discovery and successful settlement by the Kingdom of Portugal.

In 1418, two captains, João Gonçalves Zarco and Tristão Vaz Teixeira, while exploring the African coast in the service of Prince Henry the Navigator, were driven off course by a storm to an island which they named Porto Santo (English: "holy harbour") in gratitude for divine deliverance from a shipwreck.

The following year, Zarco and Vaz organised an expedition with Bartolomeu Perestrello. The trio travelled to the island of Porto Santo, claimed it on behalf of the Portuguese Crown, and established a settlement. The new settlers observed "a heavy black cloud suspended to the southwest" and upon investigation discovered the larger island they called Madeira (Portuguese: madeira, lit. 'wood').

The first Portuguese settlers began colonizing the islands around 1420 or 1425. The first settlers were the three captain-donees and their respective families, a small group of members of the gentry, people of modest conditions and some former inmates of the kingdom.

The majority of settlers were fishermen and peasant farmers who willingly left Portugal for a new life on the islands, a better one, they hoped, than was possible in a Portugal which had been ravaged by the Black Death, and where the best farmlands were strictly controlled by the nobility.

To have minimum conditions for the development of agriculture on the island, the settlers had to chop down part of the dense forest and build a large number of water channels, called "levadas", to carry the abundant waters on the north coast to the south coast of the island.

Initially, the settlers produced wheat for their own sustenance but later began to export wheat to mainland Portugal. In earlier times, fish and vegetables were the settlers' main means of subsistence.

Grain production began to fall and the ensuing crisis forced Henry the Navigator to order other commercial crops to be planted so that the islands could be profitable. These specialised plants, and their associated industrial technology, created one of the major revolutions on the islands and fuelled Portuguese industry. Following the introduction of the first water-driven sugar mill on Madeira, sugar production increased to over 6,000 arrobas (an arroba was equal to 11 to 12 kilograms or 24 to 26 pounds) by 1455, using advisers from Sicily and financed by Genoese capital (Genoa acted as 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.

"By 1480 Antwerp had some seventy ships engaged in the Madeira sugar trade, with the refining and distribution concentrated in Antwerp. By the 1490s Madeira had overtaken Cyprus as a producer of sugar."

Sugarcane production was the primary engine of the island's economy, which quickly afforded the Funchal metropolis economic prosperity. The production of sugar cane attracted adventurers and merchants from all parts of Europe, especially Italians, Basques, Catalans, and Flemish. This meant that, in the second half of the fifteenth century, the city of Funchal became a mandatory port of call for European trade routes.

Slaves were used during the island's period of sugar trade to cultivate sugar cane alongside paid workers, though slave owners were only a small minority of the Madeiran population, and those who did own slaves owned only a few. Slaves consisted of Guanches from the nearby Canary islands, captured Berbers from the conquest of Ceuta and West Africans after further exploration of the African coast. Barbary corsairs from North Africa, who enslaved Europeans from ships and coastal communities throughout the Mediterranean region, captured 1,200 people in Porto Santo in 1617.

Until the first half of the sixteenth century, Madeira was one of the major sugar markets of the Atlantic. Apparently, it is in Madeira that, in the context of sugar production, slave labour was applied for the first time. The colonial system of sugar production was put into practice on the island of Madeira, on a much smaller scale, and later transferred, on a large scale, to other overseas production areas.

Later on, this small scale of production was outmatched by Brazilian and São Tomean plantations. Madeiran sugar production declined in such a way that it was not enough for domestic needs, so that sugar was imported to the island from other Portuguese colonies. Sugar mills were gradually abandoned, with few remaining, which gave way to other markets in Madeira.

In the 17th century, as Portuguese sugar production was shifted to Brazil, São Tomé and Príncipe and elsewhere, Madeira's most important commodity product became its wine. Sugar plantations were replaced by vineyards, originating in the so-called ‘Wine Culture’, which acquired international fame and provided the rise of a new social class, the Bourgeoisie.

With the increase of commercial treaties with England, important English merchants settled on the Island and, ultimately, controlled the increasingly important island wine trade. The English traders settled in the Funchal as of the seventeenth century, consolidating the markets from North America, the West Indies and England itself. The Madeira wine became very popular in the markets and it is also said to have been used in a toast during the Declaration of Independence by the Founding Fathers of the United States.

In the eighteenth and nineteenth centuries, Madeira stands out for its climate and therapeutic effects. In the nineteenth century, visitors to the island integrated four major groups: patients, travellers, tourists and scientists. Most visitors belonged to the moneyed aristocracy.

As a result of a high demand for the season, there was a need to prepare guides for visitors. The first tourist guide of Madeira appeared in 1850 and focused on elements of history, geology, flora, fauna and customs of the island. Regarding hotel infrastructures, the British and the Germans were the first to launch the Madeiran hotel chain. The historic Belmond Reid's Palace opened in 1891 and is still open to this day.

The British first amicably occupied the island in 1801 whereafter Colonel William Henry Clinton became governor. A detachment of the 85th Regiment of Foot under Lieutenant-colonel James Willoughby Gordon garrisoned the island. After the Peace of Amiens, British troops withdrew in 1802, only to reoccupy Madeira in 1807 until the end of the Peninsular War in 1814. In 1846 James Julius Wood wrote a series of seven sketches of the island. In 1856, British troops recovering from cholera, and widows and orphans of soldiers fallen in the Crimean War, were stationed in Funchal, Madeira.

During the Great War on 3 December 1916, a German U-boat, SM U-38, captained by Max Valentiner, entered Funchal harbour on Madeira. U-38 torpedoed and sank three ships, bringing the war to Portugal by extension. The ships sunk were:

• CS Dacia (1,684 tonnes or 1,856 short tons), a British cable-laying vessel. Dacia had previously undertaken war work off the coast of Casablanca and Dakar. It was in the process of diverting the German South American cable into Brest, France.
• SS Kanguroo (2,262 tonnes or 2,493 short tons), a French specialized "heavy-lift" transport.
• Surprise (620 tonnes or 680 short tons), a French gunboat. Her commander and 34 crewmen (including 7 Portuguese) were killed.

After attacking the ships, U-38 bombarded Funchal for two hours from a range of about 3 kilometres (2 mi). Batteries on Madeira returned fire and eventually forced U-38 to withdraw.

On 12 December 1917, two German U-boats, SM U-156 and SM U-157 (captained by Max Valentiner), again bombarded Funchal. This time the attack lasted around 30 minutes. The U-boats fired 40 120 and 150 mm (4.7 and 5.9 in) shells. There were three fatalities and 17 wounded; a number of houses and Santa Clara church were hit.

The last Austrian Emperor, Charles I, was exiled to Madeira after the war. Determined to prevent an attempt to restore Charles to the throne, the Council of Allied Powers agreed he could go into exile on Madeira because it was isolated in the Atlantic and easily guarded. He died there on 1 April 1922 and his coffin lies in a chapel of the Church of Our Lady of Monte.

The Madeira archipelago is located 520 km (280 nmi) from the African coast, 805 km (430 nmi) from the closest point in the European coast (the Portuguese town of Sagres, in Algarve) and 1,000 km (540 nmi) from the capital of Portugal, Lisbon (approximately a one-and-a-half-hour flight). Madeira inhabits the extreme south of the Tore-Madeira Ridge, a bathymetric structure oriented along a north-northeast to south-southwest axis that extends for 1,000 kilometres (540 nmi). This structure consists of long geomorphological relief that extends from the abyssal plain to 3,500 m (11,500 ft); its highest submersed point reaches a depth of about 150 m (490 ft) (around latitude 36°N). The origins of the Tore-Madeira Ridge are not clearly established, but may have resulted from a buckling of the lithosphere.

• Madeira (740.7 km or 286 sq mi), including Ilhéu de Agostinho, Ilhéu de São Lourenço, Ilhéu Mole (northwest); Total population: 262,456 (2011 Census).
• Porto Santo (42.5 km or 16.4 sq mi), including Ilhéu de Baixo ou da Cal, Ilhéu de Ferro, Ilhéu das Cenouras, Ilhéu de Fora, Ilhéu de Cima; Total population: 5,483 (2011 Census).
• Desertas Islands (14.2 km or 5.5 sq mi), including the three uninhabited islands: Deserta Grande Island, Bugio Island and Ilhéu de Chão.
• Savage Islands (3.6 km or 1.4 sq mi), archipelago 280 km south-southeast of Madeira Island including three main uninhabited islands and 16 islets in two groups: the Northwest Group (Selvagem Grande Island, Ilhéu de Palheiro da Terra, Ilhéu de Palheiro do Mar) and the Southeast Group (Selvagem Pequena Island, Ilhéu Grande, Ilhéu Sul, Ilhéu Pequeno, Ilhéu Fora, Ilhéu Alto, Ilhéu Comprido, Ilhéu Redondo, Ilhéu Norte).

• 
  Comprehensive map of Madeira's main island.
• 
  Comprehensive map of Madeira's outlying island of Porto Santo.
• 
  Map of the Ilhas Desertas.
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  Map of the Ilhas Selvagens.

The ten tallest peaks in Madeira exemplify the island's diverse topography. Pico Ruivo is the highest at 1,862 metres. Madeira's mountaintops offer panoramic vistas of rugged terrain and the Atlantic Ocean, attracting hikers and nature enthusiasts seeking stunning views and challenging trails.

Madeira island is at the top of a massive shield volcano that rises about 6 km (20,000 ft) from the floor of the Atlantic Ocean, on the Tore underwater mountain range. The volcano formed atop an east–west rift in the oceanic crust along the African Plate, beginning during the Miocene epoch (5 million years ago), continuing into the Pleistocene (700,000 years ago). This was followed by extensive erosion, producing two large amphitheatres opening southward in the central part of the island. Volcanic activity later resumed, producing scoria cones and lava flows atop the eroded shield. The most recent volcanic eruptions were on the west-central part of the island 6,500 years ago, creating more cinder cones and lava flows.

It is the largest island of the group with an area of 741 km (286 sq mi), a length of 57 km (35 mi) (from Ponte de São Lourenço to Ponta do Pargo). It is approximately 22 km (14 mi) at its widest point (from Ponta da Cruz to Ponta de São Jorge), with a coastline of 150 km (90 mi). It has a mountain ridge that extends along the centre of the island, reaching 1,862 metres (6,109 feet) at its highest point (Pico Ruivo), staying below 200 metres along its eastern extent. The primitive volcanic foci responsible for the central mountainous area, consisted of the peaks: Ruivo (1,862 m), Torres (1,851 m), Arieiro (1,818 m), Cidrão (1,802 m), Cedro (1,759 m), Casado (1,725 m), Grande (1,657 m), Ferreiro (1,582 m). At the end of this eruptive phase, reefs encircled the island, its marine vestiges evident in a calcareous layer in the area of Lameiros, in São Vicente. Sea cliffs, such as Cabo Girão, valleys and ravines extend from this central spine, leaving the interior generally inaccessible. Daily life is concentrated in the many villages at the mouths of the ravines, through which the heavy autumn and winter rains travel to the sea.

Madeira has many different bioclimates. Based on differences in sun exposure, humidity, and annual mean temperature, clear variations distinguish north- and south-facing regions, as well as some islands. The islands are strongly influenced by the Gulf Stream and Canary Current, giving it mild to warm year-round temperatures. According to the Instituto de Meteorologia (IPMA), the average annual temperature at Funchal weather station is 19.6 °C (67.3 °F) for the 1981–2010 period. Relief is a determinant factor on precipitation levels; areas such as the Madeira Natural Park can get as much as 2,800 mm (110 in) of precipitation a year. Madeira hosts lush laurel forests, while Porto Santo, a much flatter island, has a semiarid climate (BSh). In most winters snowfall occurs in the mountains.

In the south, little is left of the indigenous subtropical rainforest that once covered the island (the original settlers set fires to clear the land for farming) and named it (madeira means "wood" in Portuguese). However, in the north, the valleys harbor native trees. These laurissilva forests, notably those on the northern slopes, are designated as a UNESCO World Heritage Site. Madeira's paleobotanical record reveals that laurissilva forest has existed for at least 1.8 million years. Critically endangered species such as the vine Jasminum azoricum and the rowan Sorbus maderensis are endemic. The Madeiran large white butterfly was an endemic subspecies of the large white that inhabited the laurissilva forests but has not been seen since 1977.

Hogna ingens, the Deserta Grande wolf spider, is endemic to the Madeira archipelago, specifically Deserta Grande Island. It is critically endangered. It is considered the largest member of its family. Restoration efforts are underway.

Three species of birds are endemic to Madeira: the Trocaz pigeon, the Madeira Chaffinch and the Madeira firecrest. In addition extinct species include the Madeiran scops owl, two rail species, Rallus adolfocaesaris and R. lowei, and two quail species, Coturnix lignorum and C. alabrevis, and the Madeiran wood pigeon, a subspecies of the common wood pigeon and which was last seen in the early 20th century.

A Great Auk bone is known from the Selvagens, suggesting this seabird visited at least sporadically.

Madeira is home to six species of brown mice, believed to be descendants of common European brown mice brought to the island by Vikings in the 9th century (or conceivably by 15th century Portuguese settlers), but diversified to the point where they cannot interbreed with their ancestral species or with one another. They have essentially the same genes, but rearranged to give different chromosome numbers: the ancestral species has 40 chromosomes, whereas the Madeira species have from 22 to 30. The deep valleys of Madeira are separated by high ground, and the different species of mice do not encounter each other.

This section is an excerpt from Levada (Madeira).[edit]

A levada is an irrigation channel or aqueduct specific to the Portuguese Atlantic region of Madeira. Madeira island is wet in the northwest, but dry in the southeast. In the 16th century the Portuguese started building levadas (aqueducts) to carry water to the agricultural regions in the south. Due to its mountainous landscape, building levadas promised to be a difficult venture, often tasked to criminals and convicts from continental Portugal to build these water canals. Many are cut into the mountainsides, accompanied by 40 km (25 mi) of tunnels, some of which are still accessible.

Today levadas supply water and also provide hydro-electric power. Over 2,170 km (1,350 mi) of levadas were built and later provided a network of walking paths. Paths can provide easy and relaxing walks through the countryside, while others are narrow, crumbling ledges where a slip could result in injury or death. Some improvements have been made to these pathways following the 2010 Madeira floods and mudslides. Such improvements involved the continuous maintenance of streams, paving trails, and establishing safety fences on dangerous stretches.

Two of the most popular (and demanding) hiking levadas are Levada do Caldeirão Verde and Levada do Caldeirão do Inferno. Levada do Caniçal is a much easier walk, running 11.4 km (7.1 mi) from Maroços to the Caniçal Tunnel. It is known as the mimosa levada, because "mimosa" trees (the colloquial name for invasive acacia) are found along the route.

Due to its distinct geography, economy, social and cultural situation, as well as the historical autonomic aspirations of the population, the Autonomous Regions of Madeira was established in 1976. Although it is a politico-administrative autonomous region, the Portuguese constitution specifies both a regional and national connection, obliging their administrations to maintain democratic principles and promote regional interests, while reinforcing national unity.

As defined by the Portuguese constitution and other laws, Madeira possesses its own political and administrative statute and has its own government. The branches of Government are the Regional Government and the Legislative Assembly, the latter elected by universal suffrage, using the D'Hondt method of proportional representation.

The president of the Regional Government is appointed by the Representative of the Republic according to the results of the election to the legislative assemblies.

The sovereignty of the Portuguese Republic is represented in Madeira by the Representative of the Republic, appointed by the President of the Republic on the advice of the Government of the Republic. The tasks of the Representative of the Republic are to sign and order the publication of regional legislative decrees and regional regulatory decrees or to exercise the right of veto over regional laws, should these laws be unconstitutional. Before the sixth amendment to the Portuguese Constitution passed in 2006, this responsibility was held by a more-powerful Minister of the Republic, who was proposed by the Government and appointed by the President.

Madeira is an Outermost Region (OMR) of the European Union, meaning that due to its geographical situation, it is entitled to derogation from some EU policies.

According to the Treaty on the Functioning of the European Union, both primary and secondary European Union law applies to Madeira, with possible derogations to take account of its "structural social and economic situation (...) which is compounded by their remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, the permanence and combination of which severely restrain their development". An example of such derogation is seen in the approval of the International Business Centre of Madeira and other state aid policies to help the rum industry.

It forms part of the European Union customs area, the Schengen Area and the European Union Value Added Tax Area.

Foreign affairs and defence are the responsibility of the national government. The Madeira Military Zone is the Portuguese Army's command for ground forces stationed in the islands, centering on the 3rd Garrison Regiment based at Funchal. The Navy tasks the patrol vessels Tejo and Mondego specifically to Madeira, as well as other vessels as required, in order to patrol Portugal's large economic zone. To support search and rescue, the Portuguese Air Force maintains a staging base on Porto Santo Island incorporating detachments of C-295 aircraft and Merlin helicopters.

Administratively, Madeira is divided into fifty four parishes and eleven municipalities:

Madeirans migrated to the United States, Venezuela, Brazil, Guyana, Saint Vincent and the Grenadines, South Africa and Trinidad and Tobago. Madeiran immigrants in North America mostly clustered in New England and mid-Atlantic states, Toronto, Northern California, and Hawaii. The city of New Bedford is especially rich in Madeirans, hosting the Museum of Madeira Heritage. The annual Madeiran and Luso-American celebration, the Feast of the Blessed Sacrament, the world's largest celebration of Madeiran heritage, regularly draws crowds of tens of thousands to the city's Madeira Field.

In the 1846 famine, over 6,000 inhabitants migrated to British Guiana. In 1891 they numbered 4.3% of the population. In 1902 5,000 Portuguese people, mostly Madeirans, lived in Honolulu, Hawaii. By 1910 this grew to 21,000.

1849 saw an emigration of Protestant religious exiles from Madeira to the United States, by way of Trinidad and elsewhere in the West Indies. Most of them settled in Illinois with financial and physical aid of the American Protestant Society, headquartered in New York City. In the late 1830s physician and Presbyterian minister Reverend Robert Reid Kalley, from Scotland made a stop at Funchal, Madeira on his way to a mission in China, with his wife, so that she could recover from an illness. Kalley and his wife stayed on Madeira where he began preaching the Protestant gospel and converting islanders from Catholicism. Eventually, he was arrested and imprisoned for his religious conversion activities. Another Scottish missionary, William Hepburn Hewitson, took on Protestant ministerial activities in Madeira. By 1846, about 1,000 Protestant Madeirenses, who were discriminated against and the subjects of mob violence because of their religious conversions, chose to immigrate to Trinidad and elsewhere in the West Indies in answer a call for sugar plantation workers. The exiles did not fare well there. The tropical climate was unfamiliar and they found themselves in serious economic difficulties. By 1848, the American Protestant Society raised money and sent Rev. Manuel J. Gonsalves, a Baptist minister and a naturalized U.S. citizen from Madeira, to work with Rev. Arsénio da Silva, who had emigrated with the exiles from Madeira, to arrange to resettle those who wanted to come to the United States. Rev. da Silva died in early 1849. Later in 1849, Rev. Gonsalves was then charged with escorting the exiles from Trinidad to settle in Sangamon and Morgan counties in Illinois on land purchased with funds raised by the American Protestant Society. Accounts state that anywhere from 700 to 1,000 exiles came to the United States at this time.

Several large Madeiran communities continue around the world, including in the UK and Jersey. The Portuguese British community, made up mostly of Madeirans, celebrate Madeira Day.

In Venezuela the Madeiran Portuguese settled in cities such as Caracas and rural areas of the interior. According to figures from the 1990s, around 70% of the Portuguese diaspora in that country was made up of Madeirans and their descendants, initially dedicated to activities such as agriculture, but later, due to the lack of government support, the emigrants concentrated on commerce in the large Venezuelan cities. Among the companies founded by Madeirans are the supermarkets Central Madeirense, Excelsior Gama, Supermercados Unicasa and Automercados Plaza, and many renowned bakeries. A state in Venezuela called Portuguesa was named after its large Portuguese population.

Madeira is part of the Schengen Area.

Due to its growing popularity, Madeira’s population has grown, reaching 253,259 in 2022, of whom the majority are locals. But Madeira has, for many years, witnessed a rising foreign population. As of 31 December 2022, immigrants in the region totaled 11,793 people, representing an increase of 13.3% compared to 2021. “Nationals from Venezuela (19.7%), the United Kingdom (11.8%), Germany (9.4%) and Brazil (9.2%) continue to represent the main foreign communities in the region”, according to the DREM (Madeira Statistics Department).

The gross domestic product (GDP) reached 4.9 billion euros in 2018, accounting for 2.4% of Portugal's economic output. GDP per capita adjusted for purchasing power then was 22,500 euros or 75% of the EU27 average. The GDP per employee was 71% of the EU average.

Madeira embraced Bitcoin by implementing policies that exempt Bitcoin investors from paying personal income taxes in the region. Madeira Regional Government President Miguel Albuquerque confirmed the inauguration of a business hub focused solely on Bitcoin and related innovations. Speaking in a dialogue with Prince Filip Karađorđević of Serbia at Bitcoin Amsterdam 2023, he framed the move as a significant step toward technological advancements and international partnerships.

The Madeira International Business Center (MIBC) free trade zone has led to additional infrastructure, production shops and essential services for small and medium-sized industrial enterprises. MIBC comprises three sectors of investment: the Industrial Free Trade Zone, the International Shipping Register – MAR and International Services. Madeira's tax regime has been approved by the European Commission as legal State Aid and its deadline was extended through 2027. MIBC was created formally in the 1980s as a tool of regional economic policy. It consists of (mainly tax) incentives, granted with the objective of attracting investment into Madeira.

Favorable operational and fiscal conditions were approved by the European Commission under Article 299 of the Treaty on European Union. The MIBC is integrated in the Portuguese and EU legal systems and is regulated and supervised by Portuguese and EU authorities in a transparent and stable business environment, clearly distinguished from so-called "tax havens" and "offshore jurisdictions". In 2015, the EC authorized a state aid regime for companies incorporated between 2015 and 2020 and extended the regime of tax reductions through 2027. The tax regime is outlined in Article 36°-A of the Portuguese Tax Incentives Statute. Available data demonstrates that this programme aided the local labor market, through the creation of qualified jobs and for professionals who have returned to Madeira; increased productivity; expanded business tourism from the visits of investors and their clients and suppliers, and other sectors such as real estate. Telecommunications and other services benefit from a larger client base. Companies attracted by MIBC represent over 40% of revenue in terms of corporate income tax for the Government of Madeira and nearly 3.000 jobs. Salaries there are above average in comparison with the wages paid in other sectors.

Madeira has been a significant recipient of European Union funding, totaling €2 billion. In 2012, it was reported that despite a population of just 250,000, the local administration owed some €6 billion. The Portuguese treasury (IGCP) assumed Madeira's debt management between 2012 and 2015. The region works with the central government on a long-term plan to reduce debt levels and commercial debt stock. Moody's noted that the region made significant fiscal consolidation efforts and that its tax revenue collection has improved. Tax revenues increased by 41% between 2012 and 2016, helping the region to reduce its deficit to operating revenue ratio to 10% in 2016 from 77% in 2013.

Tourism is an important sector in the region's economy, contributing 20% to the region's GDP, providing support throughout the year for commercial, transport and other activities and constituting a significant market for local products. The share in Gross Value Added of hotels and restaurants (9%) also highlights this phenomenon. The island of Porto Santo, with its 9-kilometre-long (5.6 mi) beach and its climate, is entirely devoted to tourism.

Visitors are mainly from Europe, with Portuguese, British, German and French tourists providing the main contingents (2021). The average annual occupancy rate was 60.3% in 2008, reaching its maximum in March and April, when it exceeds 70%.

Whale watching has become very popular in recent years. Many species of dolphins, such as common dolphin, spotted dolphin, striped dolphin, bottlenose dolphin, short-finned pilot whale, and whales such as Bryde's whale, Sei whale, fin whale, sperm whale, beaked whales can be spotted near the coast or offshore.

Electricity on Madeira is provided solely through EEM (Empresa de Electricidade da Madeira, SA, which holds a monopoly for the provision of electrical supply on the autonomous region) and consists largely of fossil fuels, but with a significant supply of seasonal hydroelectricity from the levada system, wind power and a small amount of solar. Energy production comes from conventional thermal and hydropower, as well as wind and solar energy. The Ribeira dos Soccoridos hydropower plant, rated at 15MW, utilises a pumped hydropower reservoir to recycle mountain water during the dry summer.

Battery technologies are being tested to minimise Madeira's reliance on fossil fuel imports. Renault SA and EEM piloted the Sustainable Porto Santo—Smart Fossil Free Island project on Porto Santo to demonstrate how fossil fuels can be entirely replaced with renewable energy, using a 3.3 MWh battery. Madeira operates a 15 MW 1-hour lithium iron phosphate battery with black start capability.

In the first half of 2022, 33% of the electricity consumed on the Portuguese archipelago of Madeira was sourced from renewable energy, a milestone achieved through a collaborative initiative co-funded by the European Union (EU).

Central to this accomplishment are the centuries-old stone pipes known as levadas, spanning thousands of kilometers and dating back to the fifteenth century. These levadas efficiently transport rainwater from northern regions to the south, serving various purposes such as human consumption, agriculture, and electricity production.

The Socorridos hydroelectric power station, fueled by water conveyed through the levadas, stands as the island's principal hydraulic system, providing power consistently throughout the year. A significant aspect of the EU-funded multi-million euro project involved enhancing water storage capacity, including the construction of a 5.4-kilometer tunnel and additional mountain tunnels, presenting formidable engineering challenges.

Wind power complements the system, facilitating the movement of stored water uphill during peak demand periods. The treated water serves dual purposes—human consumption and agriculture—while also functioning as a renewable energy source. Nuno Jorge Pereira, Water Production Director for Wood, Water, and Waste (ARM), elucidates the strategic use of water volumes to adapt to energy production levels.

This €34.7 million project, with €17.3 million co-financed by the European Cohesion Policy, not only mitigates concerns about drought but also earned acclaim as one of the best EU co-funded projects in the EGIOSTAR Awards.

The optimized Socorridos plant has notably alleviated water-related challenges for local farmers.

The islands have two airports, Cristiano Ronaldo International Airport and Porto Santo Airport, on the islands of Madeira and Porto Santo respectively. From Cristiano Ronaldo International Airport the most frequent flights are to Lisbon. There are also direct flights to over 30 other airports in Europe and nearby islands.

Transport between the two main islands is by plane, or ferries from the Porto Santo Line, the latter also carrying vehicles. Visiting the interior of the islands is now easy thanks to construction of the Vias Rápidas, major roads that cross the island. Modern roads reach all points of interest on the islands.

Funchal has an extensive public transportation system. Bus companies, including Horários do Funchal, which has been operating for over a hundred years, have regularly scheduled routes to all points of interest on the island.

Folklore music in Madeira is widespread and mainly uses local musical instruments such as the machete, rajão, brinquinho and cavaquinho, which are used in traditional folkloric dances like the bailinho da Madeira.

Emigrants from Madeira also influenced the creation of new musical instruments. In the 1880s, the ukulele was created, based on two small guitar-like instruments of Madeiran origin, the cavaquinho and the rajão. The ukulele was introduced to the Hawaiian Islands by Portuguese immigrants from Madeira and Cape Verde. Three immigrants in particular, Madeiran cabinet makers Manuel Nunes, José do Espírito Santo, and Augusto Dias, are generally credited as the first ukulele makers. Two weeks after they disembarked from the SS Ravenscrag in late August 1879, the Hawaiian Gazette reported that "Madeira Islanders recently arrived here, have been delighting the people with nightly street concerts."

Because of the geographic situation of Madeira in the Atlantic Ocean, the island has an abundance of fish of various kinds. The species that are consumed the most are espada (black scabbardfish), blue fin tuna, swordfish, white marlin, blue marlin, albacore, bigeye tuna, wahoo, spearfish, skipjack tuna and many others are found in the local dishes as they are found along the coast of Madeira. Espada is usually fried in a batter and accompanied by fried banana (Espada com banana) and sometimes a passionfruit sauce. Bacalhau is also popular, as it is in Mainland Portugal.

There are many different meat dishes on Madeira, one of the most popular being espetada. Espetada is traditionally made of large chunks of beef rubbed in garlic, salt and bay leaf and marinated for 4 to 6 hours in Madeira wine, red wine vinegar and olive oil then skewered onto a bay laurel stick and left to grill over smouldering wood chips. These are so integral a part of traditional eating habits that a special iron stand is available with a T-shaped end, each branch of the "T" having a slot in the middle to hold a brochette (espeto in Portuguese); a small plate is then placed underneath to collect the juices. The brochettes are very long and have a V-shaped blade in order to pierce the meat more easily. It is usually accompanied with the local bread called bolo do caco. A traditional holiday dish is "Carne de Vinho e Alhos", which is most closely associated with the pig slaughter that was held a few weeks before Christmas. A big event, traditionally it was attended by everyone in the village. The dish is made of pork which marinates for three days in white wine, vinegar, salt, and pepper and is then cooked with small potatoes, sliced carrots, and turnip. Another common meat dish is “Picado" - cubed beef cooked in a mushroom sauce and accompanied by fries.

Other popular dishes in Madeira include açorda, feijoada and carne de vinha d'alhos.

Traditional pastries in Madeira usually contain local ingredients, one of the most common being mel de cana, literally "sugarcane honey" (molasses). The traditional cake of Madeira is called Bolo de Mel, which translates as (Sugarcane) "Honey Cake" and according to custom, is never cut with a knife, but broken into pieces by hand. It is a rich and heavy cake. The cake commonly known as "Madeira cake" in England is named after Madeira wine.

Malasadas are a local confection which are mainly consumed during the Carnival of Madeira. Pastéis de nata, as in the rest of Portugal, are also very popular.

Milho frito is a popular dish in Madeira that is similar to the Italian dish polenta fritta. Açorda Madeirense is another popular local dish.

Madeira is known for the high quality of its cherimoya fruits. The Annona Festival is traditional and held annually in the parish of Faial. This event encourages the consumption of this fruit and its derivatives, such as liqueurs, puddings, ice cream and smoothies.

Madeira wine is a fortified wine produced in the Madeira Islands; varieties may be sweet or dry. It has a history dating back to the Age of Exploration when Madeira was a standard port of call for ships heading to the New World or East Indies. To prevent the wine from spoiling, neutral grape spirits were added. However, wine producers of Madeira discovered, when an unsold shipment of wine returned to the islands after a round trip, that the flavour of the wine had been transformed by exposure to heat and movement. Today, Madeira is noted for its unique winemaking process that involves heating the wine and deliberately exposing the wine to some levels of oxidation. Most countries limit the use of the term Madeira to those wines that come from the Madeira Islands, to which the European Union grants Protected designation of origin (PDO) status. A local beer called Coral is produced by the Madeira Brewery, which dates from 1872. It has achieved 2 Monde Selection Grand Gold Medals, 24 Monde Selection Gold Medals and 2 Monde Selection Silver Medals. Other alcoholic drinks are also popular in Madeira, such as the locally created Poncha, Niquita, Pé de Cabra, Aniz, as well as Portuguese drinks such as Macieira Brandy, Licor Beirão.

Laranjada is a type of carbonated soft drink with an orange flavour, its name being derived from the Portuguese word laranja ("orange"). Launched in 1872 it was the first soft drink to be produced in Portugal, and remains very popular to the present day. Brisa drinks, a brand name, are also very popular and come in a range of flavours.

There is a coffee culture in Madeira.

Football is the most popular sport in Madeira and the island was indeed the first place in Portugal to host a match, organised by British residents in 1875. The island is the birthplace of international star Cristiano Ronaldo and is home to two prominent teams, C.S. Marítimo and C.D. Nacional, the later of which he played youth football for before leaving to join Sporting CP.

As well as football, the island is also home to professional sports teams in basketball (CAB Madeira) and handball (Madeira Andebol SAD, who were runners up in the 2019 European Challenge Cup). Madeira was also the host of the 2003 World Handball Championship.

The Rally Vinho da Madeira is a rally race held annually since 1959, considered one of the biggest sporting events on the island It was part of the European Rally Championship from 1979 to 2012 and the Intercontinental Rally Challenge from 2006 to 2010.

Other popular sporting activities include golf at one of the island's two courses (plus one on Porto Santo), surfing, scuba diving, and hiking.

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Madeira Island has the following sister provinces:

Aosta Valley, Italy (1987)

Jersey (1998)

Eastern Cape, South Africa

Jeju Province, South Korea (2007)

Gibraltar (2009)

Portugal has issued postage stamps for Madeira during several periods, beginning in 1868.

• "Have Some Madeira M'Dear"
• Geology of Madeira
• List of birds of Madeira
• Madeira Islands Open, an annual European Tour golf tournament
• Surfing in Madeira
• Islands of Macaronesia
  • Azores
  • Cabo Verde
  • Canary Islands

• Pitta, Nicholas Cayetano de Bettencourt (1812). Account of the Island of Madeira. London: C. Stewart Printer. hdl:2027/hvd.hxjfzu.
• Koebel, William Henry (1909). Madeira: Old and New. London: Francis Griffiths.
• Dervenn, Claude (1957). Madeira. Translated by Hogarth-Gaute, Frances. London: George G. Harrap and Co.
• Walvin, James (2000). Making the Black Atlantic: Britain and the African Diaspora. London: Cassell.

• World History Encyclopedia – The Portuguese Colonization of Madeira. Archived 21 May 2021 at the Wayback Machine.
• Wikimedia Atlas of Madeira
• Madeira's Government Website. Archived 2 November 2018 at the Wayback Machine.
• "Madeira" . Encyclopædia Britannica. Vol. 17 (11th ed.). 1911. pp. 280–283.