Perast is a small baroque town on the inner bay of Kotor, arranged along a single waterfront street with two small islands just offshore. It's one of the most picture-perfect places in Montenegro, and thankfully not yet overrun — though it gets busy in peak season.
The two islands are the main draw. Our Lady of the Rocks (Gospa od Škrpjela) is an artificial island, gradually built up over centuries as sailors dropped stones around a rock to fulfil a vow. The church on it is filled with 2,500 votive silver plaques — offerings from fishermen and sailors — and a collection of paintings by Tripo Kokolja, a 17th-century Perast painter of some note. St George's Island next to it has a Benedictine monastery and a small cemetery. Boats to the islands leave from the Perast waterfront throughout the day (a few euros, paid to the boatman). The Bujović Palace, the finest of the town's baroque palaces, houses a small but worthwhile town museum.
Perast itself has around 20 baroque palaces in various states of preservation, and several of the bay's better waterfront restaurants. It was once a prosperous naval power and had the largest merchant fleet on the Adriatic — hard to imagine now. Allow two to three hours here, more if you linger over lunch with a view of the islands.
Perast is 12km from Kotor along the bay road. There's a bus from Kotor (ask for the Perast stop), or drive — parking on the main road above town, then walk down.