In 1893, vineyard owner and wine producer Pantaleone Caruso and his wife rented five rooms in one of the wings of the Marquis D’Afflitto’s 11th-century palace and opened them as the "Pensione Belvedere". Caruso chose the name Belvedere, meaning “beautiful view”, because of the hanging gardens facing the mountains and plunging down to the sea. Getting there was not easy, but the first, adventurous visitors were more than rewarded by its location among lemon groves and lush vineyards and the splendid views.

The hotel became a favourite haunt of the Bloomsbury Group—among them Virginia Woolf and Lord Keynes—and it also helped Graham Greene and William Styron to find their way, respectively, to The Third Man and Set This House On Fire. Another eminent writer to fall for Ravello’s charms was Gore Vidal, who, while staying at room n° 9, wrote his 1968 novel Myra Breckinridge. He loved the setting so much he later bought his own corner of paradise in Ravello, a clifftop villa which he only reluctantly left when the climb became too strenuous.

In 1903, a journalist guest fell in love with the hotel and described it in The New York Times. Suddenly this little retreat became famous across the Atlantic. Wealthy Americans who wintered on the European rivieras immediately adopted the remote little hideaway which, when its five rooms became 24, was transformed into a hotel occupying the entire palazzo, and the owner’s name added to the original "Belvedere".

Pantaleone was the first Caruso to become famous. When the tenor Enrico Caruso landed in New York to make his debut at the Metropolitan and needed to sign a promissory note, the singer was asked if he was a relative of Caruso from Ravello, and he replied yes.

Over the years, guests have been welcomed by the same vast fireplace, the 18th–century frescoes, the terrace framed by Norman arches, the park filled with pergolas, oleanders and wisteria, the two stone lions guarding the entrance and, in the distance, the wonderful belvedere.