The most densely populated place in the world, Macao consists of a rocky, hilly peninsula, connected by a sandy 700-ft-wide (213-m) isthmus to China's Zhongshan (Tangjiahuan) island; and the two small islands of Taipa and Colôane, which are connected to the peninsula by bridges and a causeway. The capital, the city of Macao, is approximately coextensive with the peninsula and contains almost the entire population of the province.

Macao's historic structures include the remaining facade of St. Paul's Basilica (built 1635 by Roman Catholic Japanese artisans; burned 1835), a fascinating example of late Italian Renaissance architecture, with mixed Western and Asian motifs; St. Domingo's church and convent (founded c.1670); the fort and chapel of Guia (1626); the fort of São Paulo de Monte (16th cent.); and statues of da Gama and Luís de Camões, who wrote (1558–59) part of The Lusiads there. Macao is separated from China proper by a barrier gate (built 1849, replacing one erected by the Chinese in 1573).

The inhabitants are overwhelmingly Chinese and about half are Buddhist; there is a Roman Catholic minority. Cantonese and other Chinese dialects, as well as Portuguese, are spoken. Macao is ruled under the Basic Law as approved by the National People's Congress of China in 1993.

A free port, Macao is a leading trade, tourist, and fishing center, but gambling casinos account for much of its GDP. There are also textile, clothing, electronics, toys, plastics, fireworks, and food-processing industries. Most of Macao's transit trade with China is by way of its shallow harbor on the west side of the peninsula. Tourism, mainly for gambling, is extremely important to the province, with many coming from nearby Hong Kong. Restrictions on foreign investment in casinos were lifted in 2001, and by 2006 Macao had exceeded Las Vegas in total money gambled. There is daily ferry and bus service to Guangzhou and ferry, hydrofoil, and helicopter service to Hong Kong. Taipa is connected to Macao city by bridges; Taipa and Colôane islands are connected by a causeway. An airport opened in 1995.

The colony's name is derived from the Ma Kwok temple, built there in the 14th cent. Macao was the oldest permanent European settlement in East Asia. It was a parched and desolate spot when the Portuguese established a trading post there in 1557. For nearly 300 years the Portuguese paid China an annual tribute for the use of the peninsula, but in 1849 Portugal proclaimed it a free port; this was confirmed by China in the Protocol of Lisbon in 1887. With the gradual silting up of its harbor and the rise (19th cent.) of Hong Kong, Macao lost its preeminent position and became identified to a large extent with smuggling and gambling interests.

After 1949 the population was swelled by an influx of Chinese refugees from the mainland. In the winter of 1966–67, Communist-organized riots shook the province, resulting in a capitulation by the Portuguese to Chinese demands to bar entry to refugees and prohibit anti-Communist activities. In 1974, Macao was established as a Chinese territory under Portuguese administration; the Chinese refused to accept the return of the territory at the time. A real-estate boom in the early 1990s had largely waned by the end of the decade, but with end of the monopoly in its gambling industry the territory began a new period of real-estate and economic growth. Under the terms of a 1987 agreement, Macao became a special administrative region under Chinese sovereignty in Dec., 1999. Macao has been promised 50 years of noninterference in its economic and social systems.