The Azambuja fault is a NNE trending structure located 50 km north of Lisbon, the capital and most populous city of Portugal. The fault has been considered as a possible source for the historical, large earthquakes. Understanding this fault is a priority in seismic hazard evaluation of this region. The fault has a clear morphological signature. Miocene and Pliocene sediments are tilted eastward and cut by steeply dipping mesoscale fault segments, presenting reverse and normal offsets with a net downthrow to the east. Neotectonic studies indicate a Quaternary slip on the fault of 0.05–0.06 mm/year. However, no direct evidence of the Azambuja fault affecting the Pleistocene or Holocene sediments was found so far. Here, we present the findings from high-resolution seismic reflection studies using both P- and S-waves over the Holocene deposits. The detection of small-throw faulting in ductile sediments is a challenging task. We show that multiple signatures, like perturbations in the reflection hyperbolae visible in shot and CMP gathers, interruptions of reflectors in stacked sections, lateral seismic velocity variations obtained by horizon velocity analysis, all at coincident locations, strongly suggest that the activity of the Azambuja fault has affected the Holocene sediments in the study area. The lateral velocity variations are corroborated by wavepath eikonal traveltime tomography and velocity analysis supported by seismic modeling. By means of 2D viscoelastic modeling, we explain the absence of fault-related diffractions and negligible back-scattered energy from the fault. Using data from nearby boreholes, we find that the 15 ka old alluvium cover has indeed been disturbed by the presence of shallow fault strands. Considering the estimated vertical throws and the empirical relationships between fault length, co-seismic rupture and magnitude, a slip rate of 0.07 mm/y, slightly larger than previously thought, is expected for this fault.