From prosaic 19th-century beginnings as a port at Lago Llanquihue’s north end, idyllic Puerto Octay has become one of the region’s most picturesque locales, enjoying magnificent views across the lake to Volcán Osorno . Local pleasure boats, though, have supplanted the steaming freighters that once connected Octay with Puerto Varas , and it’s become a low-key destination for summer holidaymakers who arrive by paved road from Osorno , 50 kilometers northwest.
The German immigrant presence is palpable in its architecture, food, the checkerboard landscape of dairy farms and woodlands, and in its apparent middle-class contentment.
Puerto Octay (population 3,403) also includes Península Centinela, a wooded spit protruding into the lake that’s home to several hotels and campgrounds. From town, it’s possible to travel Llanquihue’s western shore to the resort village of Frutillar , or its eastern shore to Ensenada  and Parque Nacional Vicente Pérez Rosales , via a road whose northern half is now paved.
Buses and minibuses now leave from the new Terminal de Buses (La Esperanza and Balmaceda), half a block south of the Plaza de Armas. Via Octay (tel. 064/230118) and Vergara go to Osorno ’s main bus terminal several times daily, while Thaebus goes half a dozen times daily to Puerto Montt  via Frutillar  and Puerto Varas . Four times daily, Arriagada goes south to Las Cascadas , roughly halfway to Ensenada .