In 1718, the confraternity of Nossa Senhora de Guadalupe, with the support of Archbishop D. Rodrigo de Moura Teles, made an agreement with the master bricklayer Manuel Fernandes da Silva to proceed with the demolition of the old chapel, dedicated to Santa Margarida, and the construction of a new one, in the same place. The reasons for such strong support would have been the desire to leave a visible legacy in the city and the perception that raga would grow at the base of Monte do Reduto. In fact between the century. XVIII and XIX the Bairro do Reduto or Campo Novo would be born next to the Chapel.

Despite having a centralized plan, like some churches in Braga, its circular shape is unique in the city. The construction of this chapel in 1719 will have influenced some churches in Brazil in the state of Minas Gerais (Nossa Senhora do Rosário dos Pretos in Ouro Preto built by a natural builder from Braga)