Kalofer is situated in the Tundzha river valley extension, at the foot of the Krastets (a.k.a. Strazha) ridge - a shelf connecting the Balkan Mountains with the Sredna Gora Mountains. Northwest of the city is the highest peak in the Balkan Mountains - Botev.
As legend says, the city was founded in the 16th century by Kalifer Voyvoda, (militia leader), a terror to the Turks. The Sultan - after not being able to defeat or catch him - gave his blessing for Kalifer and his freedom fighters to settle in the forest in return for the promise that they would not attack the Turkish caravans. They captured maidens for themselves from Sopot and created a town. During the next centuries it grew to be a cultural and commercial centre and was called Allan (tur. Golden) Kalofer. Two schools were built and educational societies were founded. The history of the town abounds with the names of distinguished Bulgarians - scholars, community activists and revolutionaries. During the Russo-Turkish War of Liberation, Kalofer shared the fate of many other Bulgarian towns - it was put to fire by the bashi-bozuk.