Lagoa das Furnas is the volcanic crater lake a few kilometres south-west of the village. About two kilometres across and surrounded by steep wooded slopes, it sits inside the larger Furnas caldera, one of the three active volcanic complexes of São Miguel. A circular road runs around the shore (about ten kilometres) and is best walked, cycled, or driven slowly.
The northern shore holds the fumarole field — the famous caldeiras das Furnas, where columns of steam rise out of the ground and small vents bubble with grey muddy water. The fumarole area is freely accessible (a small parking fee applies); you can stand within a few metres of the boiling vents and feel the heat radiating off the earth. The southern shore is quieter and holds the small Capela de Nossa Senhora das Vitórias, a neo-Gothic funerary chapel built in the 1880s.