The construction of this castle started in 1555 and it was in 1575 that Manuel, of the royal court, was nominated as its first Captain General. The fortress has a one and only entrance situated on the north side which opens in the wall. In 1983, the main urban centre of Terceira, Angra do Heroísmo, was classified as World Heritage by UNESCO.

The Pousada de Angra do Heroísmo, São Sebastião, in is located at the top of a cliff inside a sixteenth century fortress; this is the only example of military architecture. This hotel in Angra do Heroísmo is situated in a fortress commonly known as the Castelinho de São Sebastião and was ordered built by El-Rei D. Sebastião, from where it got its name, on a land overlooking the bay called the Pipas Port, which in that time was bought from Pedro do Canto e Castro. 

The rooms of this Açores hotel have a modern decor and furnishings. The suite and few of the bedrooms have balconies with a seaside view. All of the rooms in the Pousada de Angra do Heroísmo have LCD cable television, air conditioning and a safe.