There are various theories as to the origin of the villa's name, Água de Pau, which literally means water of wood (which can be interpreted as waters where wood exist).
Its administrative role lasted for 330 years, until 24 June 1853, when the parish was incorporated into the municipality of Lagoa, while still retaining the honorific vila title (under Regional Legislative Decree 29/2003/A), to function as a civil parish.