Borgo Cerreto stands where the River Vigi converges with the River Nera.

It was developed in the late Middle Ages at a fairly important crossroads from the Roman era onwards: here the road along the bottom of the Nera valley (which ran along the left bank of the river, probably along the track of the Spoleto-Norcia railway line) met with the road that ran from Colfiorito (Valico di Plestia) to Sellano and the valley of the river Vigi along mountain paths via Ponte, San Giuliano and Rocchetta towards Cascia.

The town developed along the road that rose to the castle of Cerreto, whose village, Borgo, consisted of a fortified outpost to fight against its rival in Ponte and to protect the crossings over the two rivers. Some tower walls that used to watch over the two draw-bridges can be seen near the present day bridges. A wall with a gate opening in the direction of Cerreto completed the defence system of Borgo along the northern and eastern sides together with the tower at the church of San Paterniano.

The modern road system runs exclusively along the bottom of the valley and follows the commercial position of crossroads still occupied by Borgo. But the A road of the Valnerina has cut through the settlement and the considerable demolition has greatly transformed the buildings which makes the original town plan and its connections with the surrounding area difficult to see ( the church and convent of San Lorenzo on the road to Ponte immediately beyond the River Nera were of particular importance).