The church of Santa Margherita rises on top of a hill and overlooks the suggestive landscape of Cortona's countryside. At the beginning, the Camaldolese monks built a smaller structure shortly after the year 1000 in honour of San Basilio. St. Margherita spent the last years of her life and died in a room adjacent to the back of the church in 1297.

In 1258, the Church of San Basilio underwent severe damage during the pillage of Cortona in 128, when the town was annexed to the inhabitants of Arezzo that had been challenged and defeated the year before with the support of the Florentine army. Since 1288, St. Margherita worked for the re-establishment of the church that was opened again with the name of "Chiesa dei Santi Basilio, Egidio e Caterina d'Alessandria". After her death, the saint was buried near the small church.
Therefore, the population of Cortona decided to raise a new, bigger church near the one of San Basilio and to dedicate it to St. Margherita. Giovanni Pisano was entrusted with this task and he carried it out in the first years of the XIV century. In 1330, once it was finished and consecrated, St. Margherita's relics were put in the church. Soon, the whole complex took her name.
Later, the church was enriched with works made by various artists, frescoes and statues. Today, only the Saint's Cenotaph and the rose-window of the façade can still be seen, while two sculptures and part of a fresco attributed to Lorenzetti are exhibited at the Museo Diocesano of Cortona. Many churches in the territory of Cortona underwent a Baroque transformation between the XVIII and the XIX centuries. In the XIX century, the churches of San Basilio and of St. Margherita were almost completely rebuilt and the choir, the second and the third vaults of the nave remained unchanged.
Extraordinary works of art are placed in the church. In particular, the marble mausoleum in the left wall of the transept and the urn of the Saint by Pietro da Cortona are worth being mentioned. A wooden Crucifix dating to the XIII century and carried here from the church of Saint Francis can be admired. According to tradition, St. Margherita used to pray before it. Also the Bell tower, dating to the first half of the XVII century, and the ancient Franciscan convent rise near the church.