Like most pop festivals in isolated countries, it was a very important event for the still incipient music industry of the 60's and 70's. Left wing composers and writers would try to squeeze subversive lyrics in the contest, with great effect. After the 1974 revolution, incidentally code-triggered by that year's winner being played on national radio, Portugal became increasingly open to foreign culture, thus deeming the Festival as a lesser musical event, dominated by below standard pop songs with little or no impact in the industry, although remaining a high audience TV show.
The 90's saw a recovery of the contests image, then considered a viable means for a new singer to start a career. Internationally acclaimed Portuguese singers Dulce Pontes and Sara Tavares made their debut in the 91 and 94 editions respectively. Many other unknown performers like Lucia Moniz and Anabela leaped to national stardom after taking the RTP trophy.
After reaching and all-time high 6th place in the 1996 edition of the Eurovision Song Contest, the festival steadily declined from then on. In 2000 the winner Liana did not participate in the Eurovision Song Contest 2000, as Portugal had for the first time been relegated due to consecutive poor showings. In 2002 the Festival da Canção wasn't organized, contradicting the tradition of staging a Festival da Canção even without participating in that year's Eurovision Song Contest, as happened in 2000 and 1970. Since 2001, the festival saw consecutive changes of format. 2005 saw RTP commissioning a song for Eurovision, rather than organizing some kind of competition. Since 2006 RTP seemingly settled for a traditional multi-singer, multi-composer competitive format, claiming the memory of older contests and songs. Producers have since been invited to come up with songs, lyrics and singers, and the 2007 result with Sabrina almost making it to the Eurovision final, gave RTP the necessary confidence boost to maintain the current format. In 2009 an open call for songs was held by RTP, abolishing the invited producers method, with online voting deciding the qualifiers to the televised final from a list of 24 songs, with 12 competing in the live contest.
More changes to the format of the contest were made in 2010. Two semi-finals and a final are now held to select the winner. Foreign composers were once again allowed to compete, but performers must still be Portuguese and all songs must still be sung in Portuguese.