Hundreds of firefighters battle blaze near Lisbon
STORY: High temperatures and strong winds in the area made it harder for emergency services to quell the fire, which started around 3 p.m. local time (1400GMT).
Authorities blocked several roads and evacuated a care home. Many locals left their homes out of fear.
Smoke rising from the fire earlier on Sunday could be seen from Lisbon's city centre, according to a Reuters witness.
Other fires were raging elsewhere in Portugal, including in the central municipality of Ourem, where flames destroyed thousands of hectares two weeks ago. More than 1,000 firefighters were mobilised across the country.
Like other European nations, Portugal experienced a scorching heatwave in recent weeks, with temperatures exceeding 40 degrees Celsius (104°F) in various parts of the country. Although the heat has eased, temperatures are climbing again.
Weather agency IPMA said three districts in northern Portugal would be on "red alert" for extreme heat on Monday.