Terlago is located at the foot of Paganella in the valley depression that connects the Adige Valley with the Valle dei Laghi. This town has very ancient origins and in its vicinity there were found some of the latest traces of the whole region from the prehistoric era, referable to the late Paleolithic and Mesolithic, which prove the presence of human activity between the 11th and the 8th millennium BC. Terlago was also a place where the Celts established a permanent settlement. In the following eras, the centre of Terlago became an important crossroad between the road connecting Anaunia, the Adige Valley and the Sarca Valley with the Terlago Castle. The castle was built in a strategic position on the edge of the village and its function was to control this important transit route.
The town is known for its lake, for the pleasant microclimate and for the different sporting activities that the territory offers. In addition to the visible climbing cliff, there are many trails for mountain bikers and hikers. The name comes from the Latin and derives from trilacum (inter-lacum) that means between the lakes, which clearly refers to Santo Lake and Lamar Lake (there is a known analogy with the place Interlagos in San Paolo, Brazil).Within the municipal territory are included the hamlets of Monte Terlago and Covelo.