Tzfat, also spelled Safed, Safas, Tzfas, Zefat, Zfas....well, you get the idea... is known as the City of Kabbalah. It's also known as the Mystical City and is believed to be one of the four holy cities of Judaism. 

Why is Tzfat known as the City of Kabbalah?

"Kabbalah" in hebrew means "receive".  It is believed that within the Torah, the Five Books of Moses, God encoded secrets which, if understood, enable us to become closer to Him and to better perform His commandments.  In studying the kabbalh, we can receive  this knowledge that enables us to be better people and closer to God.

The study of Kabbalah was believed to have developed in the 1st century C.E. when R' Shimon Bar Yochai was fleeing from the Romans, who had decreed that he should be put to death.  Along with his son, R' Elazar, R' Shimon Bar Yochai hid in a cave near the city of Peki'in, and during this period, it is believed that God imparted the secrets of Kabbalah to him through divine visits.

Upon the reversal of the death sentence against him, R' Shimon Bar Yochai left the cave and began to travel around the Galillee, teaching the secrets that had been taught to him.  R' Bar Yochai is also believed to have written the Zohar , the basis of what God had taught him about the Torah's secrets.

Throughout the next 1400 years, Kabbalah study was limited to very few scholars and was considered to be dangerous for anyone to delve into who didn't have a strong Torah background.  The secrets of Kabbalah were believed to be potent, and its study was limited to very few men who were strong enough Jewishly to look beyond the texts of the Torah and Talmud. 

Following the Expulsion from Spain and Portugal in 1492, some Jews returned to the Land of Israel.  The already-existing Jewish community of Tzfat made this town a possible refuge for many, and the proximity to Mt. Meron, the burial place of R' Shimon Bar Yochai, together with the aura of knowing that this was the area where he had begun the first study of Kabbalah drew many exiles here, including several well-known scholars. 

When R' Yitzhak Luria, the ARI, arrived, he cemented Tzfat as the “City of Kabbalah", for The Ari was known even in his own time as being the pre-eminent scholar of Kabbalah.  Not only was his knowledge and understanding of the secrets of Kabbalah far beyond that of any other scholar, living or passed, but he was privileged to continue to develop the study through divine teachings which were passed to him as he sat with Elijah the Prophet in the Eliyahu HaNavi synagogue (today the Ari Sepharadi) studying. 

The Ari refined the study of Kabbalah to what it is known today.  The Kabbalah is seen today to be a vehicle for man to strengthen his relationship with God and with his fellow man. 

Tsfat today is known as one of the 4 holy cities of Judaism because of it's reputation as the City of Kabbalah.  The others are:

Jerusalem the Center of the Universe, with the Temple (and remaining Western Wall) having been the Center.

Hebron is the burial place of the patriarchs and matriarchs

Tiberias was the seat of the scholars who codified the Oral Law into the Written Law, the Talmud (Mishna and Gemmorah)