The city lies on the north bank of the Tagus River, about 8 miles (13 km) from the river's entrance into the Atlantic Ocean. From the ocean upstream to the city, the river is almost straight and about 2 miles (3 km) wide. It is spanned, on the west side of the city, by the 25th of April Bridge. Just east of the bridge, the Tagus suddenly broadens into a bay 7 miles (11 km) wide called the Mar de Palha (“Sea of Straw”) because of the way that it shimmers in the sun. Scenically spectacular, this hill-cradled bay of burnished water lies on a strategic sea route and serves as a busy port, handling much of the trade between Portugal and Spain.

Lisbon is built in a succession of terraces up the slopes of a range of low rolling hills that rise from the banks of the Tagus River and the Mar de Palha northwest toward the Sintra Mountains, whose covering of lush Mediterranean and Atlantic European flora provides an attractive retreat for the city's population. Sections of the city vary considerably in elevation, especially in the older areas along the water's edge, which offer splendid views of the river and the low cliffs that line the river's southern shore. Several geologic faults cross Lisbon and the surrounding region, but, notwithstanding the devastating earthquake of 1755, seismic activity has been limited to slight tremors since the 20th century.

Lisbon has a mild and equable climate, with a mean annual temperature in the low 60s F (about 17 °C). The proximity of the Atlantic Ocean and the influence of the Gulf Stream mediate the weather conditions throughout the year. January, the coldest month, has an average temperature of 50 °F (10 °C), and in August the temperature seldom exceeds 82 °F (28 °C). Average monthly rainfall ranges from 0.1 inch (3 mm) in summer up to about 4 inches (100 mm) in winter.

It is traditional for poets to refer to the entwining Tagus (Tagus River) as Lisbon's lover. The river is indeed an ever-present part of the city's decor, and the official entrance to Lisbon is a broad marble staircase mounting from the water to the vast, arcaded Commerce Square (Praça do Comércio). The three landward sides of the square are surrounded by uniform buildings dating from the 18th century. This formal, Baroque-inspired layout is pierced by a monumental archway, built a century later, marking the entry north into the central city. In the middle of the square stands a bronze statue of King Joseph I (Joseph) on horseback, an important work by the sculptor Joachim Machado de Castro. Many government offices occupy the buildings that surround Commerce Square.

Also to the east, Chelas and Olivais-Sul, two public housing districts implanted on heathland previously considered too difficult to build upon, provide residence for lower-income families. Despite these government-sponsored projects, adequate housing remains a problem as an influx of immigrants (mainly Africans, eastern Europeans, and Brazilians) has caused a housing deficit.

A number of neighbourhoods extend west of the Baixa toward the suburb of Belém. Each possesses its own distinctive character, reflecting the epoch in which it was built. The Bairro Alto (“Upper District”), for example, dates primarily from the 16th century. It is characterized by its maze of straight and narrow streets. Some of these streets, especially those leading down to the Baixa, are so steep that they terminate abruptly, giving way to stairs, cable cars, and, in one case, an elevator (the Santa Justa Lift; an iron structure designed by French architect Raoul Mesnier du Ponsard). Just west and north of the heart of Bairro Alto is the Palace of the National Assembly, also known as the Palace of São Bento. Nearby is the official residence of Portugal's prime minister. Farther west, toward Belém, Necessidades Palace houses the Ministry of Foreign Affairs.

Suburban development affected the city's character starting in the second half of the 20th century, when Lisbon lost about half its population because of migration to the periphery. New housing developments replaced manufacturing plants in Greater Lisbon. In the north, near the University of Lisbon (Lisbon, University of) campus, two neighbourhoods, Alvalade (which sprouted in the 1940s and 1950s) and Telheiras (which developed from the 1970s to the 1990s), were among the most successful examples of urban planning in the 20th century. Many affluent families have moved out of the city to newer gated communities or to villas in Greater Lisbon, mostly to the surrounding regions of Oeiras, Cascais, and Sintra.

Although the Lisbon metropolitan area occupies only about 3 percent of Portugal's total area, more than one-fourth of the country's inhabitants reside there. Lisbon experienced a population surge in the 1970s owing to migration (human migration) from the country's rural areas as well as the return of Portuguese citizens who had been living in Portugal's African colonies, which attained independence in 1975. Migration rates stabilized in the 1980s. In the mid-1990s, however, Africans, mainly from Cape Verde, were the most populous immigrant group; with a birth rate considerably higher than the national average, they contributed to a renewed growth of the population.

At the beginning of the 21st century, the foreign population accounted for about one-tenth of Lisbon residents. In addition to those from Cape Verde, immigrants arrived from Brazil, Angola, Guinea-Bissau, and various European countries. There are also smaller South Asian communities in the city proper and metropolitan area. Although this migratory current has put a strain on the city's resources, Lisbon's mixed population has transformed the city into a cosmopolitan and dynamic metropolis.

Lisbon's economy has historically been based on the fishing industry. Since the 1970s other industries have migrated from the Baixa to other locales in the metropolitan area. Following the 1975 revolution, Lisbon's heavy industries were nationalized. By the 1980s they were reprivatized, with multinational companies dominating the technology and pharmaceutical industries. Since the 1990s services have become the dominant economic activity of Lisbon.

Service activities dominate the Lisbon economy, employing more than three-fourths of the labour force. Tourism and commerce have played a major part in Lisbon's modernization, and revenues from tourism have helped offset usually negative national trade balances. The 1998 World's Fair and the impressive waterfront renovation have contributed significantly to a new image of Lisbon. The fair sparked a radical renewal of the most derelict areas of the city. Slaughterhouses, waste treatment centres, and oil refineries have given way to recreational and health centres, museums, hotels, and new housing. Lisbon's temperate climate, nearby beaches, castles, and historic districts attract a significant number of tourists each year, and the city is a popular port of call for cruise ships. Several foreign bank branches operate in the city. Since Portugal's entrance into the European Community (now embedded in the European Union) in 1986, there has been an increase in the number of foreign financial institutions and corporations in Lisbon. Large retail outlets and department stores have opened in the Baixa and on the periphery of the Lisbon city centre.

As the capital of Portugal, Lisbon and its surrounding suburbs house all of the country's principal government institutions. Lisbon is divided administratively into concelhos (municipalities). The municipalities are further divided into bairros (wards) and freguesias (parishes). Representatives to parish assemblies are chosen through local elections for four-year terms. They then elect an executive body, the parish committee. Lisbon's municipal assembly consists of representatives chosen by their parish committees and members directly elected by the local citizens. It serves as the legislative branch of local government and elects the executive branch, the municipal council and the mayor. The municipalities of Lisbon city and its metropolitan area constitute the distrito (district) of Lisbon, which is headed by a civil governor, who is appointed by and responsible to the central government through the minister of the interior.

As a major urban centre, Lisbon has a higher percentage of doctors and other health professionals than the rest of Portugal. The city's hospitals include state, private, and military establishments. Since the 1990s, efforts have been made to modernize the city's public hospitals, and branches of larger hospitals have opened in other areas of the city.

Officially, education in Portugal is free and compulsory for children ages 6 through 15. In addition to public schools, Lisbon has many private schools, including American, French, German, Spanish, and Swedish schools.The medieval University of Lisbon (Lisbon, University of) was founded in 1288 and remained Portugal's only university until the 16th century. It moved back and forth between Lisbon and Coimbra several times before settling in Lisbon from 1377 to 1537, when it permanently relocated to Coimbra and took the name of that city. Thus, the capital was left without a university until 1911, when the University of Lisbon was restored. The Technical University of Lisbon was founded in 1930, and the New University of Lisbon opened in the city during the 1970s. The Catholic University of Portugal was established under the tutelage of the Roman Catholic Church in 1968. Lisbon also has a large number of specialized colleges and polytechnical institutes. Prior to the 1974 coup in Portugal, university education was restricted to the elite. Not until the 1990s did the number of university applicants increase, and then, after a brief flourishing of private universities, student applications decreased again in the 2000s. Many Portuguese students have chosen to study abroad, especially in the United Kingdom, while a number of new immigrants have opted to enter the workforce rather than pursue higher education.

Lisbon's rich cultural life was further enhanced in the 1990s by the city's preparations for hosting the World's Fair, including the construction of the Belém Cultural Centre (1992), which offers visual and performing arts and houses exhibits, an auditorium, and an arts complex. It is but one component of the city's network of cultural centres, public libraries, and research institutes. Another prominent cultural institution, the Calouste Gulbenkian Foundation and Museum, presents music and ballet, exhibits other fine arts, and displays the broad-ranging personal collection of its eponymous benefactor, an Armenian oil-lease negotiator who lived in Lisbon from 1942 until his death in 1955. Culturgest, a multifunctional auditorium and exhibition centre, opened in Lisbon in the early 2000s.

The city has many other museums, including those dedicated to modern, antique, sacred, decorative, and folk arts. Two specialized, rather unusual museums are the Azulejo Museum and the National Museum of Coaches. The former, located in the convent of Madre de Deus, boasts a large and varied collection of the painted tiles (azulejos (azulejo)) for which the Iberian Peninsula is famous. The National Museum of Coaches occupies a wing of the Portuguese president's official residence and contains an impressive display of carved and gilded coaches.

Lisbon's municipal orchestra was founded in 1971. The city is also the site of the National Conservatory, which offers advanced instruction in both music and drama. The St. Charles and the National Theatre of Dona Maria II are Lisbon's two principal theatres. The former, which was constructed in the late 18th century, has a beautiful elliptical interior, and the latter, which was built about 1845, displays a facade of six giant columns saved from the convent church of St. Francisco, which was destroyed by an earthquake. The interior, gutted by fire in 1966, has been restored.

Neither of these edifices is as theatrical as the interiors of some of the churches built or restored after the 1755 earthquake. In gold, marble, carved wood, and rare tiles, these interiors are decorated in Baroque, Rococo, or rocaille style. One outstanding example is the 16th-century church of St. Roque, whose unpretentious exterior belies its opulent collection of painted tiles, paintings, and mosaics inlaid with semiprecious stones.

Lisbon is distinguished as one of the few places in the world whose chief Roman Catholic clergyman bears the title of patriarch. However, Lisboetas are typically less devout than the northern Portuguese and attend church mainly for rites such as christenings, weddings, and funerals. Religious processions are generally subdued affairs, without the colour and the drama found in Spain. The June feasts of the popular saints (St. Anthony, St. John, and St. Peter) are exceptions. Lisboetas celebrate them by donning imaginative costumes, jumping over bonfires, and dancing in the streets until dawn. Indeed, these lively events, held in the city's historical districts, retain all the pagan elements of a midsummer festival.

Lisbon has several sports and recreational areas. Many of the housing developments are planted with trees and grass, their small parks adding to Lisbon's collection of dozens of public gardens. The largest public park, Monsanto, covers about 3.5 square miles (9 square km) and has numerous recreational facilities. Rolling hills planted from the 1930s provide a windbreak for the city and are now thickly forested. There are also botanical gardens and a zoo within the city. Football (soccer) is very popular in Portugal, and three of the country's most prominent teams call Lisbon home: FC Porto, Benefica, and the Sporting Club of Lisbon.

The valley in which the heart of Lisbon now lies was, in prehistoric times, the bed of a forked branch of the Tagus River. (The subway now forks at the same spot.) No evidence has been uncovered to show who were the first residents on the hills surrounding the valley. Although it seems likely that the city was founded about 1200 BC as a trading station by the far-ranging Phoenicians, there is no unassailable proof of the story. The city's ancient name, Olisipo (Ulyssipo), may be derived from the Phoenician alis ubbo (“delightful little port”) or from the legend that the city's founder was Odysseus.

Whatever the city's origins, it is known that the area was under Roman domination from 205 BC to about AD 409 and that Julius Caesar raised the settlement to the dignity of a municipium and named it Felicitas Julia. A few inscribed stones remain as evidence of the Roman presence. The Romans lost the city to the migratory peoples known as the Alani, who were driven out by the Suebi, who in turn were conquered by the Visigoths (Visigoth). The base plan of the original fortifications is thought to be Visigothic and, if so, is the sole vestige of their reign.

The Muslims (Islāmic world) of North Africa (Moors (Moor)) took Lisbon when they overran the Iberian Peninsula in the 8th century; they stayed for 433 years, despite incursions by the Normans (Norman) and by Alfonso VI of Castile and León in 1093. Under the Moors the city was known by variations of the name “Lisbon”: Luzbona, Lixbuna, Ulixbone, and Olissibona.

Behind their walls, the Moors (Moor) were able to hold out for months when the city was assailed by Crusader forces—English, Flemish, Norman, and Portuguese under Afonso I (Afonso Henriques) (Afonso I), the Portuguese king. The city finally fell in 1147 and then successfully resisted Moorish attempts to win it back. The Moorish alcazar was transformed into a Portuguese royal palace, and, according to legend, the Lisbon Cathedral (Sé Patriarcal) was converted from a mosque (with subsequent restorations in the styles of many periods after fires and earthquakes). There is no evidence, however, of a building on the site of the cathedral before the time of Afonso I.

King Dinis I (Dinis) (1279–1325) founded the University of Lisbon in 1288, and during his reign other hilltops around the central valley were crowned with convents and churches.

In 1372–73 Lisbon was besieged and burned by the Castilians, who forced King Ferdinand I (Ferdinand I), an unsuccessful contender for the Castilian throne, to repudiate his alliance with England; thereafter the king swiftly erected new defenses. His wall—more than 3 miles (5 km) long, with 77 towers and 38 gates and enclosing more than 247 acres (100 hectares)—withstood the renewed Castilian attack of 1384, which followed Ferdinand's death.

Manuel I promoted the urbanization of Lisbon, creating new districts, and by the Tagus he constructed the Ribeira Palace, with a large square laid out along its eastern flank. The area between the Rossio and the Palace Terrace was soon crisscrossed with streets, along which rose the new shops, churches, and hospitals of what had become a phenomenally prosperous city. Although Lisbon suffered a serious earthquake in 1531 and some sanitary problems, its development was not hampered, and it advanced with new prestigious construction, mainly along the Tagus River.

The prosperity was chimerical, however. John III (the Pious) (John III), who had succeeded Manuel, permanently transferred (1537) the university to the royal palace at Coimbra, far from the capital's excesses. He also invited the Jesuits (Jesuit) and the inquisition to come to Portugal. The inquisition office, located in the Rossio, was particularly ferocious in its persecution of the Jews, who were the bankers, financiers, and moneylenders of the time. Many wealthy Jews had their property and goods confiscated; some emigrated to Holland or other countries, taking their money and financial expertise with them. As a result, Lisbon's connections with foreign markets were disrupted and the country's economy suffered severe financial constraints.

In 1578 King Sebastian (Sebastian) of Portugal was killed in a disastrous invasion of Morocco: two years later, the Spanish pushed into Portugal, and Philip II of Spain became king of both countries. In 1588 it was from Lisbon that the Invincible Armada sailed against England, Portugal's oldest ally. In the half century that followed, Lisbon lived relatively well as a port for the riches of the Spanish Main. In 1640 a conspiracy of Lisbon nobles struck for freedom and drove out the Spaniards, restoring Portugal's independence. Restoration Square, just north of Rossio Square, is named for them.

With the Cromwellian treaty of 1654, following British military assistance to the Portuguese in the war with Spain, the British merchants trading and living in Lisbon set up a corporation, which became known as the British Factory. The Factory negotiated with the Portuguese government for trade concessions and other privileges, appealing to the British government to put pressure on the Portuguese authorities when necessary. Britain's economic and political influence on Portugal was strong, and the Factory remained in existence until 1810.

The Sé and most of the churches were repaired or rebuilt, but the 14th-century Carmel (Carmo) Church was left as it was. Looming from its hilltops over the Baixa, the roofless Gothic shell was converted into an archaeological museum, while its cloister served as the barracks for the National Republican Guard, a paramilitary security force. The Palace of the Inquisition, utterly flattened, was not rebuilt when Pombal enlarged and realigned the Rossio, and on its site, 90 years later, the National Theatre of Dona Maria II was erected. Pombal banished the Jesuit order and transformed their establishment into St. Joseph's Hospital to replace the destroyed All Saints Hospital. The medical school scrambled for room at St. Joseph's until it acquired a new building of its own late in the 19th century. The Jesuit novice house was converted to serve as the Nobles' School. Later governments expelled more religious orders, whose buildings became barracks, hospitals, royal academies, and government offices.

During the Peninsular War of the early 1800s, Lisbon alternated between French and British control. When Napoleon (Napoleon I) invaded Portugal in 1807, the Portuguese royal family fled to Rio de Janeiro in Brazil. Rio replaced Lisbon as the capital of the Portuguese empire from 1808 to 1821, which enabled Portugal to maintain its independence. The war was followed by 10 years of revolutionary outbursts in Lisbon as liberal constitutionalists and absolutists fought over succession to the throne. Nevertheless, 19th-century Lisbon continued to expand and, by 1885, embraced some 20,378 acres (8,250 hectares), while the population had doubled in 100 years to reach 300,000. Public buildings, such as the new city hall and the Ajuda Royal Palace, had been built, and the harbour had been modernized and quays constructed on land reclaimed from the river. The railway had appeared, and a system of horsecars served the Baixa.

The greatest change in the city, and the one most important for modern expansion, was the opening in 1880 of a new main street—Avenida da Liberdade. The municipality bordered the central six-lane carriageway with wide blue mosaic sidewalks graced with palms and shade trees, fountains, and ornamental waters stocked with goldfish and swans. The street remained the same through the 20th and into the 21st century, with the addition of outdoor cafés beneath the trees.

In conjunction with the new thoroughfare, a series of avenidas novas (“new streets”) expanded the city northward, and new neighbourhoods developed like those that bordered Avenida da Liberdade. In 1901 the electric streetcar made its appearance, enabling more people to live farther away from their employment in the Baixa. Three cable cars shuttled up and down the adjacent hills, and the giant elevator designed by French architect Raoul Mesnier du Ponsard hissed grandly between the city's upper and lower levels.

New water supplies, augmenting those of the 18th-century aqueduct of Águas Livres, were introduced from Alviela. Consequently, water was piped directly into houses, eliminating the hassle of having to call a water porter.

In 1906 Portugal's King Charles appointed João Franco as prime minister and allowed him to assume dictatorial powers, a decision that was met by strong opposition. On the morning of Feb. 1, 1908, a newspaper reported that a new law had gone into effect calling for the deportation to Africa of anyone who opposed the policies of the monarch. That afternoon Charles and the crown prince were assassinated by anarchists on the northwest corner of Commerce Square. That same day, Manuel, the king's younger son, ascended to the Portuguese throne as Manuel II. The new king vowed to uphold the constitution and destroy his father's oppressive regime. Two years later Manuel II abdicated. A republic was declared, and a period of national instability ensued. When António de Oliveira Salazar (Salazar, António de Oliveira) took control of the near-bankrupt country in 1932, he established a corporate state for which he alone determined the policies until his retirement in 1968. There was considerable growth in Lisbon throughout this time. New industries emerged, and oil and petrochemical refineries were constructed. Electrical and metal manufactures were mass-produced. Ports, roads, and railways were modernized, and housing projects, colleges, hospitals, and sports arenas were built.

During the world wars the city was able to offer refuge to some 200,000 foreigners. Until the end of World War I, urban expansion followed the pattern of broad avenues established in Paris in the mid-19th century by Georges-Eugène Haussmann (Haussmann, Georges-Eugène, Baron). After the war, city extensions became more functional, though the new street patterns were relatively uncharacteristic, dominated by big highways and the absence of a coherent urban design.

In the 1960s national policy began to change, allowing economic expansion. The 30-year-old austerity program of stability and self-sufficiency (at an admittedly low level of investment and consumption) was somewhat softened, and tourists and foreign corporations began to be accommodated. In 1966, well ahead of schedule, the Salazar (now the 25th of April) Bridge was completed.

On April 25, 1974, the government of Marcello Caetano (Caetano, Marcello José das Neves Alves), Salazar's successor, was overthrown by a military coup. By the early 1980s, however, political instability and economic difficulties remained serious problems and hindered the country's—and the city's—efforts to bring about social and economic reforms. The restriction of government funds for the municipality of Lisbon led to a bitter struggle within the city council, where resistance mounted to speculative building projects that would affect the environment in historical parts of the city.

In 1986 Portugal's integration into the European Communities (see European Community) stimulated modernization in Lisbon, and private investment contributed to the construction of new buildings. The World's Fair in 1998 spurred the modernization of the city's infrastructure, increased tourism, and stimulated economic growth. In the early 2000s, however, Portugal experienced economic stagnation, and its economic development fell behind that of other European countries. Lisbon fared better than other cities in the country, however, and, along with tourists, it has continued to attract foreign and real estate investment.