Praça do Comércio, better known as Terreiro do Paço, is a square on the banks of the Tagus and for over two centuries this was the site of the royal palace. In 1511, King Manuel I relocated to this square from his home in Castelo de São Jorge. Inside the former royal household there was a historic library containing over 70,000 volumes, which were destroyed in the 1755 earthquake.

The reconstruction of the square was key to the Marquês de Pombal’s recovery project. It today houses Government buildings as well as the famous cafe Martinho da Arcada, one of Lisbon’s oldest cafes and one of Fernando Pessoa’s favourites. A busy ferry regularly sets off from the terminal at the south end of the square across the Tagus to Barreiro. The equestrian statue of José I on the square was erected 1775 by Machado de Castro, Lisbon’s top sculptor of the 18th century. The bronze statue has turned green over the years. At the north end of the square a massive Arco de Triunfo can be seen leading to Rua Augusta in the Baixa district.