The world-famous event was last hosted by Falmouth in 1998
More than 80,000 people are expected to attend the Tall Ships regatta in Falmouth, Cornwall.
The town is hosting four days of festivities before the tall ships race begins on Saturday.
About 25 vessels are expected to take part in the Funchal 500 Regatta from Falmouth to Madeira, organised by Sail Training International.
The festivities will include public sailing trips, live music, children's entertainment and markets.
Organisers believe the regatta could contribute substantially to Cornwall's economy.
The large square-rigged vessels will be berthed at Queen's Wharf in Falmouth Docks.
Sail Training International said the regatta was the centrepiece of year-long celebrations to mark the 500th anniversary of the first settlement on the Portuguese island of Madeira.
The event was last hosted by Falmouth in 1998.