Costa Favolosa and sister ship Costa Fascinosa were ordered in October 2007 as part of a €2.4 billion expansion of the Costa Crociere fleet, with five ships entering service between 2009 and 2012 to increase the company's passenger capacity by 50%. Costa Favolosa cost €510 million to build.

The names of the two ships were selected via competition. The first phase saw 16,000 pairs of names submitted by travel agents and their customers from around the world, after being asked to suggest names. These names were to evoke the idea that the ships were magical and glamorous places. 25 name pairs were shortlisted and placed on the company's website, where over 42,000 visitors voted on their favourite. Favolosa (Italian for "fabulous") and Fascinosa ("fascinating" or "glamorous") were selected as the winning name pair.

The first section of the cruise ship was laid down at Fincantieri's Marghera shipyard on 5 November 2009. The ship was launched from the builder's dry dock on 6 August 2010.
The vessel is based on the Concordia class design already in service with Costa Crociere. At 114,500 gross tons, she can carry up to 3,800 passengers in 1,506 cabins; six more than previous Concordia class ships.

Costa Favolosa is the fifteenth ship in service with Costa Crociere.

Costa Favolosa entered service in July 2011 when she set sail on a three-day preview cruise departing from Venice on July 4, with calls at Dubrovnik, Croatia; and Koper, Slovenia, and on July 7, an eleven-day inaugural cruise departing from Venicea with calls at Bari, Italy; Izmir and Istanbul, Turkey; Mykonos, Piraeus and Olympia, Greece; and Dubrovnik.

For the 2011 summer season, Costa Favolosa sailed seven-day cruises from Venice and Bari to Olympia, Izmir, Istanbul and Dubrovnik before repositioning to Dubai for a series of winter cruises.