After attempting to establish a French settlement on Sainte Croix Island, Port-Royal was founded in the spring of 1605. This new colony was located in the basin of the Dauphin River (today Annapolis River), near by Bay Française, known today as the Bay of Fundy (Nova Scotia).

Port-Royal is considered by some historians as the first real permanent European settlement in North America, three years before the foundation of Jamestown in Virginia (USA). This colony is also recognized by many as the first capital of Acadia. In 1790, under English domination, Port-Royal was called Annapolis Royal.

After suffering from scurvy, starvation and intense cold, survivors cheerfully welcomed the arrival of François Gravé Dupont. The French captain arrived on Island of Sainte Croix with ships full of food. Then Dupont accompanied Samuel de Champlain and explored, during six weeks, the shores of Bay Française. They were looking for a better place to establish the colony and protect the Settlers from the terrible American winter. On the mainland, they finally chose a place owned by Jean de Biencourt de Poutrincourt. Dupont and Champlain founded a new colony named Port-Royal and, with the help of the settlers, they built the Port-Royal habitation and fortifications. They moved some of Sainte Croix Island dwellings to the new settlement. When Dugua left the colony to return to France, 45 men were living in Port-Royal and were ready to face the winter. Only 12 men died during the winter of 1605.

Moreover, it was during this particular winter that Samuel de Champlain created the first social club in North America called "The Order of Good Cheer" (l'Ordre du Bon Temps). Each inhabitant had to organize a dinner for the entire colony and provide good food and good times. Many activities were organized in order to improve the health and morale of all during the long winter: music, poetry, cultural activities, etc. Even theatre was a good way to entertain the colony. Marc Lescarbot, a young lawyer from France, was the one to bring theater to North America. In 1606, for the first time in the New World, a theatre company performed a play entitled "The Theatre of Neptune".

In July 1606, Dugua and Poutrincourt came back from France with food and 50 men including Charles de Biencourt, Louis Hébert and Marc Lescarbot. Poutrincourt was then the Lieutenant Governor of Acadia. He made his men work very hard: they prepared and sowed the gardens, built a watermill, a blacksmith shop and roads to have access to the fields. Poutrincourt developed the fur trade and explored with Champlain the north coast of the Minas Basin Equally important, he created friendly and strong relations with the Micmacs and their chief Membertou. The reward of this hard work included but was not limited to all the goods the colony harvested, ensuring the men a better quality of food, rich in vitamin C. The settlers also learnt from Native people better hunting and fishing techniques.

Unfortunately, Port-Royal had to be abandoned in the fall of 1607, ordered by the King of France. He revoked Dugua's monopoly on fur trade in North America pretending Dugua failed to establish a permanent French colony. Without a substantial source of funds, Dugua was unable to finance the colony. With all the settlers, he left Port-Royal in 1607 after asking Chief Membertou to keep an eye on the Habitation.

In 1610, the French came back to Port-Royal. Poutrincourt had received from the King the entitlement to Port-Royal. Chief Membertou received him with a warm welcome. Hoping to regain royal favour and financial backing from the religious community, Poutrincourt encouraged Membertou and his family to convert to Catholicism. The next year, two members of the Jesuit community arrived at Port-Royal and complained about the work done by Reverend Fléché. These complaints created some conflicts between the Port-Royal population and the two priests. King Henry IV revoked his financial support to the colony and Poutrincourt returned to France in order to raise funds. While his two sons, Charles de Biencourt and Jacques, took care of Port-Royal, in 1613, the Jesuits founded a new settlement on Monts-Deserts Island. There were approximately 30 men and two priests with some goats and horses living in Saint-Sauveur.

Port-Royal witnessed many battles and conquests. This started in 1613 when Samuel Argall attacked the French colonies, burning and destroying Saint-Sauveur, Port-Royal and Sainte Croix Island. Scared by all this violence, the French settlers hid in the forest and lived with the Micmacs. Back from France in 1614, Poutrincourt learned of the destruction of Port-Royal and decided to abandon the settlement to return to the Old Countries.

Then in 1621, James I of England appointed William Alexander Governor of Acadia. Nova Scotia is born. Some English colonists settled at Port-Royal while in 1629, a Scottish settlement was established near the colony.

In 1636, four years after Saint-Germain-en-Laye treaty returned Acadia to France, forty families returned to Port-Royal. 300 soldiers were also living at the colony.

In 1654, British seized Port-Royal but were not interested in sending settlers or garrison. They preferred to concentrate their efforts on developing the fur trade and negotiating with Native people.

Although Acadia was ceded back to France in 1670 with the signing of the Treaty of Breda, the territory and Port-Royal were lost again during the War of the Spanish Succession (1701-1714). Unprotected, depleted by plague, Port-Royal was finally ceded back to England in 1710 after being attacked by 2000 men. The former Port-Royal, now owned by the British, was renamed Annapolis Royal.