If you are in Lisbon, I recommend renting a car and driving to The Algarve area. It is an absolutely beautiful area located along the coast at the Southern part of the country.
We stopped at a quaint little town called Faro that was right on the water. The views of the water were beautiful but it is the inside of the small town that captured me. It doesn't take much time to walk around the center but worth getting out of the car if you are in the area.