The village of Vale de Salgueiro allows the practice each year, causing an outcry among outsiders.
Locals say the practice is centuries-old, but nobody is sure what it symbolises or why parents buy the packs of cigarettes for their children and encourage them to take part.
The legal age to purchase tobacco in Portugal is 18, but nothing prohibits parents from giving children cigarettes, and Portuguese authorities do not intervene to stop the practice.
Guilhermina Mateus, a 35-year-old coffee shop owner, cites custom as the reason why she gives her daughter cigarettes.
Ms Mateus said: “I don’t see any harm in that because they don’t really smoke, they inhale and immediately exhale.”