Luz is located in the southwest corner of the municipality of Lagos, and is bordered to the south by the Atlantic Ocean, to the north by Barão de São João and is adjacent to Budens, in the municipality of Vila do Bispo. It is surrounded by two mountainous areas, Montinhos da Luz (99 meters) and Montinhos do Burgau (68 meters). The beach in Praia da Luz is a medium sized Blue Flag beach with two distinct zones: the white sandy beach area and the rocky cliff area, characteristic of the Algarve. Whilst the waters are typically clean and transparent, its temperatures are variable, due to the Atlantic currents. Demographically, the older parish of Luz was a small centre. By the 18th century, following the 1755 Lisbon earthquake, the region was destroyed, and many of its residents abandoned the area. The redevelopment of the region only began in the second half of the 19th century.
Luz is dominated by its beach, and is part of the Algarve´s Gold Coast (Costa d'Oiro). This has attracted many visitors to the region, resulting in a shift from an economy based on fishing to one providing services for tourists. Along the beach, many of the canning factories were closed and replaced by windsurfing and diving schools, as well as restaurants and shops adapted to the needs of seasonal visitors.
Luz is pretty and has a wonderful beach. The village has a homely and welcoming ambiance where visitors and long-term residents can spend the warm summer days whiling away the hours in the beachside cafes and restaurants.