Olinda features a number of major tourist attractions, such as a historic downtown area (World Heritage Site), churches, and the Carnival of Olinda, a popular street party, very similar to traditional Portuguese carnivals, with the addition of African influenced dances. Unlike in Rio de Janeiro and Salvador, in Olinda, admission to Carnival is free. All the festivities are celebrated on the streets, and there are no bleachers or roping. There are hundreds of small musical groups (sometimes featuring a single performer) in many genres.
Several indigenous tribes occupied the coast of Northeastern Brazil for several thousand years, and the hills of the present day municipality of Olinda had settlements of Caetés and Tupinambá tribes, which were frequently at war. French mercenaries are thought to be the first Europeans to get to the region, but the Portuguese exploited intertribal rivalries and managed to build a stronghold on the former Caeté village in the higher hill. Recent studies by the Universidade Federal de Pernambuco have uncovered new evidence of the pre-colonial population of the area. The settlement of Olinda was founded in 1535 by Duarte Coelho Pereira; it was elevated to a town on March 12, 1537. It was made the seat of the Territorial Prelature of Pernambuco in 1614, becoming the Diocese of Olinda in 1676.
Olinda was the capital of the hereditary captaincy of Pernambuco, but was burned by Dutch invaders. The Portuguese built their town on the hill, for practical purposes (sewers) and to make it easier to defend. In the 17th century the Kingdom of Portugal was united with Spain (the 1580-1640 Iberian Union period). Taking advantage of this period of Portuguese weakness, the area around Olinda and Recife was occupied by the Dutch who gained access to the Portuguese sugarcaneplantations. John Maurice, Prince of Nassau-Siegen was appointed as the governor of the Dutch possessions in Brazil in 1637 by the Dutch West India Company on recommendation of Frederick Henry. He landed at Recife, the port of Pernambuco and the chief stronghold of the Dutch, in January 1637. By a series of successful expeditions, he gradually extended the Dutch possessions from Sergipe on the south to São Luís de Maranhão in the north. He likewise conquered the Portuguese possessions of Saint George del Mina, Saint Thomas, and Luanda, Angola, on the west coast of Africa. After the dissolution of the Iberian Union in 1640, Portugal would reestablish its authority over the lost territories of the Portuguese Empire.
Besides its natural beauty, Olinda is also one of the most important of Brazil's cultural centers. Declared in 1982 a Historical and Cultural Patrimony of Humanity by the UNESCO, Olinda relives the magnificence of the past every year during the Carnival, in the rhythm of frevo, maracatu and others rhythms.
The main economic activities in Olinda are based in tourism, commerce, transportation industry and artcraft. The tourist sector has a boom every Carnival when thousands of people are in the old historic town center.