The city served as a royal residence during the reign of King John II (1481–95). With the exception of the Igreja (church) de Jesus (begun 1490) and the 17th-century Castelo de São Filipe, the older buildings of Setúbal were almost totally destroyed in the catastrophic earthquake of 1755. In the sand hills of the left bank of the estuary are the ruins of the Roman town of Cetobriga, which was destroyed by tidal wave in AD 412.

The city and surrounding areas have been marked by extensive industrial growth in recent years. Automobile manufacture has become an important part of the local economy. Other industries include glassware, chemicals, electronic and electrical equipment, and pharmaceuticals. As with Portugal's other major ports, Setúbal's port has received a major overhaul. Major road building in the 1990s radically improved links between Lisbon and Setúbal, to the south to Faro, and to the east with Spain. Pop. (2001) 91,316.