Puerto Varas is the prettiest town in Chile's Lake District, set on the western shore of Lago Llanquihue with the snow-capped cone of Volcán Osorno rising symmetrically across the water. On a clear day the view from the lakefront is one of the finest in South America, and it never quite gets old no matter how many times you walk along the shore.
The town has a strong German colonial heritage, visible in the shingled houses, the rose gardens, the Black Forest-style hilltop church, and the kuchen served in almost every cafe. German settlers arrived in the mid-nineteenth century and their influence still shapes the architecture and the food. Puerto Varas is small enough to walk in an hour but lively enough to keep you occupied for several days, with good restaurants, a handful of craft breweries, and a relaxed lakeside atmosphere.
The real draw, though, is the surrounding landscape. Vicente Pérez Rosales National Park is just east of town, home to the thundering Petrohué waterfalls and the emerald-green Lago Todos los Santos. You can hike the lower slopes of Osorno, kayak on the lake, raft the Petrohué river, or drive the scenic road to the village of Ensenada. In winter, Osorno's slopes open for skiing. Two hours southeast, the Cochamó valley hides Chile's answer to Yosemite. Puerto Varas is the natural base for all of it.