Although it is not known when the settlement was established, it appears Faaborg had already received privileges as a market town in the 13th century. Located on a promontory surrounded by water on three sides, the site was further protected by a moat and a town wall. Around 1477, a monastery was established which over the years acquired most of the property in the town and its surroundings. After the Reformation it was used for a time as a hospital until it was finally demolished. The monastery chapel became the parish church.