Approaching a wine region regularly touted as one of the world's most picturesque - along a road recently named the world's best for driving enthusiasts, thanks to its ratio of bends to straights - you suspect you're in for a treat. But nothing prepares me for just how staggeringly beautiful northern Portugal's Douro Valley is.

Hugging every curve of the Rio Douro, we sweep along the N222 from Regua to Pinhao, past endless terraced vineyards carved into the steep hillsides. Criss-crossed by narrow dirt roads and dotted with olive groves, centuries-old quintas (estates), many still family-run, look down on the deep green waters below.

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Despite being the oldest demarcated wine region in the world (and a World Heritage site to boot), the 250,000-hectare Douro Valley is something of an unsung hero in the European wine world. For centuries, the Douro was known only for port, the fortified wine named for Porto, the city downriver, where it was aged in oak barrels.

Since the 1990s, however, the Douro has been making a name for itself as a producer of top-quality red table wine. The extreme climate - "nine months of winter and three months of hell", the locals like to say - and soaring schist-soiled slopes are ideal for bold reds, ranging from light, Bordeaux-style claret to rich, Burgundian-style wines aged in new oak. Some winemakers are even producing crisp-edged whites.

Emerging from the shadows of their European counterparts, Douro Valley wines have caught the attention of serious oenophiles, although many were still surprised to see a port - Dow's Vintage Port 2011 - nab the top spot in last year's influential Wine Spectator magazine's Top 100 list. Two other Douro reds cracked the top five, also from the heralded 2011 vintage, which was declared the best in 50 years by some vintners.

Winemakers may have mastered the terroir, but the Museu do Douro, in Regua, the region's largest riverside town, provides a sense of just how unforgiving it is. Growers use dynamite to blast the schist slopes into submission; the harvest is still done by hand; and many wineries tread the traditional way, barefoot in large stone lagares (shallow treading tanks). Until the 1960s, long-oared rabelo boats navigated the treacherous rapids of the river, ferrying port from the hillsides to the warehouses of Porto.

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Dozens of indigenous grape varieties are often mixed together in the old vineyards of the Douro, although only five are recommended for port.

We spend a few days navigating the hair-raising high roads between quintas - many are open for tastings and tours, and a growing number are adding boutique accommodation.

At Folgosa, along the N222, we linger over lunch at DOC, chef Rui Paula's restaurant. Built on stilts over the river, the sleek property has floor-to-ceiling windows and a large outdoor terrace that offers prime views of the surrounding vineyards and passing boats. The food is as sublime as the setting: smoky foie gras, delicate red mullet and crispy suckling pig with creamy galette potatoes, paired with excellent local wines and a 10-year-old tawny port.

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Back in Pinhao, a quaint town set on a curve of the river, we stop by the 19th-century train station to admire the blue and white azulejos (hand-painted tiles) decorating its walls, depicting scenes from the annual harvest. Strolling up the hill to the shiny new visitor's centre at Quinta do Bomfim, we sample ports and Douro reds made by the Symington family, who have tended the vines for five generations. A lazy afternoon sailing upstream from Pinhao in a small cruiser gives a different perspective of the sun-baked landscape, shaped by more than 2,000 years of toil.

Portugal's second city, located at the mouth of the river, Porto is a puzzle of steep cobbled streets, beautiful baroque churches and colourful azulejo-clad buildings. The once-shabby city has been undergoing a renaissance, sparked by its status as European Capital of Culture in 2001; crumbling old townhouses are being transformed into boutique hotels while new budget airline routes and a new cruise terminal have made it easier than ever to visit.

There's also a steady stream of new bars and restaurants, including Cantinho do Avillez, from acclaimed Portuguese chef José Avillez, which is inspired by one of his five Lisbon-based outposts of the same name. A meal of playful petiscos (small plates), such as "21st Century Professor-style eggs" (sous vide eggs and bacon lardons sprinkled with breadcrumbs), and "exploding" olives - washed down with more wine, of course - is highly recommended.

In Ribeira, Porto's World Heritage-listed centre, the riverfront plaza is packed with souvenir stalls and touristy cafes serving the local specialities of tripas à moda do Porto (tripe and white bean stew) and francesinha, a calorific cheese and steak toastie smothered in a tomato and beer sauce. The backstreets are more authentic, with fresh laundry fluttering overhead and the smell of grilling sardines wafting through the warm air.

On the opposite side of the bank is Vila Nova de Gaia. Its terracotta-tiled port lodges are emblazoned with names such as Sandeman, Taylor's and Graham's, reflecting the early British influence on production. When 17th-century wars with France cut off their supply of French wines, the Brits turned to the rich reds being made in the Douro. After fortifying the wine with grape spirit, so it didn't spoil when shipped, the sweet dessert tipple was born.

At Taylor's, we tour cellars holding thousands of oak barrels, some the size of small trucks, and taste three ports, including a white that is popular as a summer aperitif served chilled or over ice with tonic.

"As the wine ages in barrels, we lose a small proportion each year to evaporation," our guide says. "We call this the 'angels' share' - but, luckily, they leave some for us."

Getting there: Lufthansa flies daily from Hong Kong to Frankfurt, and from the German city to Porto, in Portugal. Regua is an hour and a half's drive from Porto.