Europe's cradle of discoverers, where the days last all night long, emerges as a city to be discovered. Bruce Stutz finds global style energizing an imperishable Iberian capital

My arrival in Lisbon is, by choice, during the anniversary year of the great earthquake—and little-known but ruinous tsunami—that 250 years ago destroyed the city, and my first thought is that reconstruction is still under way. As the cab winds through the streets, I see facades obscured by scaffolding and draped in black protective scrim. Subway stations are under construction; cranes hold girders above holes in the ground; buildings that are nothing more than uprights of steel, gleams in their architects' eyes, already bear banners declaring the opening of a hotel or an apartment building.

The amiable crew on the transatlantic flight all told me that Lisbon, basking in the Euro glow, is feeling flush.

"You have to go to the Bairro Alto. That's where everything is. It's a big bar scene."

Another disagrees. "He should go to the new clubs and discos on the docks."

With shopping, club, bar, restaurant, music, gay, and even real estate scenes, this thousand-year-old city has become a rising star on the European stage.

"Ask Verônica," they tell me. "She's Brazilian, and she knows Lisbon."

"In the last eight years," Verônica says, "Lisbon is very new." She too recommends the Bairro Alto, especially on weekends, when the bars are crowded until three or four in the morning, or even all night. But above all, she says, "Don't miss the restaurant A Travessa. Ask for António and order the bull. Do both and you won't be sorry."

I quickly realize that she's right about the city's animated rebirth. I wonder if she's also right about the bull.

My first stop is, in fact, in the Bairro Alto. A friend, a Lisboan living in New York, had put me in touch with Jorge Spencer, an architect who teaches and works in Lisbon. He suggested meeting at the Lisboa Regency Chiado, one of a spate of newly restored hotels. "If you want to see Lisbon," he said, "here, at sunset, is the place to see it."

We take the elevator up to the terrace bar, where the view extends over the city's blushing hills and basins. Jorge recalls stories from the gritty times when Portugal was under the military dictatorship of António Salazar and Lisbon bore an ashen Fascist profile. In the 1970s, following Salazar's death, a socialist regime nationalized much of the industry but hardly improved the economy. The new era began when the country joined the European Union in 1986 and accrued the benefits of a nation in need: an influx of investment and favored trading status. Economic growth peaked in 1998 when Lisbon hosted a successful World Expo. Under the leadership of architects such as Portugal's own Manuel Salgado, Lisbon acquired a new urbanity. Its buildings won international prizes. New subways revived the nearly lost Portuguese art of glazed painted tiles. Tourists came.

After that, economic growth nearly slowed to a halt, but low interest rates and the willingness to go into debt have fueled a construction boom. Behind us, in the Bairro Alta, every block has new lofts, duplexes, condominiums. And low prices relative to the rest of Europe continue to drive tourism.