Graciosa Island is situated in the northwest tectonic structure called theTerceira Rift, oriented southeast to northwest and coincident with the orientation of the archipelago. The presence of the Rift has deformed Graciosa into an elongated oval form 12.5 km long by 8.5 km wide.
The coast is rough and rocky but generally low, except in the northwest along the Serra Branca (where the cliffs are 200 meters high). There are two shallow bays, situated in the southeast and southwest corresponding to fishing ports in Vila da Praia and Folga, respectively. Along the northeast coast there are several smaller coves near Santa Cruz da Graciosa that were used as ports but are now abandoned, and the older whale and commercial port in Barra, now used as a recreational zone.
- The Caldeira Massif, in the extreme southeast of the island, comprising a well preserved volcano and caldera;
- Serra das Fontes, located along the northeast coast, a zone of cliffs and escarpments formed by local tectonics;
- The Serra Dormida and Serra Branca Volcanic Complexes, occupying a third of central island, and weathered by local tectonics;
- The Santa Cruz Platform, occupying the northwest of the island, characterized by a relief that is gently sloping (approximately 50 meters) and punctuated by several volcanic cones.
- Volcanism on Graciosa was predominantly characterized by low explosivity, although there appear some deposits that show indications of elevated explosivity in its geological record. Aerial volcanism had its beginning approximately 600,000 years ago with the formation of a shield volcano, which is still visible in the Volcanic Complex of Serra Branca (the oldest part of the island). This was followed by periods of explosivity, related to the faults that traverse the zone, forming numerous cones that constitute a major part of the Serra Dormida and Serra das Fontes region. The type of volcanism altered radically around 350,000 years ago with the formation of the central volcano (and later caldera) associated with a different magma chamber, resulting in greater explosivity and giving rise to thick sheets of pumice that layered Serra Branca. The formation of the Santa Cruz Platform comes from the more recent geological volcanism associated with lower explosive basaltic eruptions resulting in numerous cones and sub-aerial deposits that cover the center and northern portions of the island. This phase evolved towards the southeast forming the Caldera Massif and many of the islets and submarine mounts along the coast. The last phase of the geological history of Graciosa occurred 2,000 years ago, forming Pico Timão and the basaltic flows that are located in the surrounding areas.
- The territory of Graciosa Island consists of one municipality, Santa Cruz da Graciosa (4,780 inhabitants in 2001), divided into four civil parishes:
- Santa Cruz - the seat of the municipality and principal urbanized population on the island, located on eastern coast;
- São Mateus da Praia - a historic village and once municipal seat, until the it was unincorporated in the 19th century;
- Guadalupe - the principal rural population on the island;
- Luz - civil parish better known locally as "Sul" (South), located along the southern coast of the island.
Owing to concentration of agriculture, animal husbandry and dairy industries, the island has maintained the relatively rural and tranquil character. The island's fields produce various fruits, wines, grass-fed beef and dairy cattle as well as cheese and other dairy products. The construction of a commercial port and the 1980 construction of the Graciosa Aerodrome has retained the islands links to the archipelago while strengthening exports and importing goods and services. In addition to this, the island has benefited from infrastructural investments that have included the re-qualification of the secondary school, the construction of a new milk factory and fishing port. As well, improvements to the recreational areas in Praia and refurbishment of the Thermals in Carapacho, the construction of a new hotel and Medical Center have been done in order to improve both the tourist industry and support the local community.
