Numerical simulations support the occurrence of a catastrophic tsunami impacting all of the eastern Mediterranean in early Holocene. The tsunami was triggered by a debris avalanche from Mt. Etna (Sicily, Italy) which entered the Ionian Sea in the order of minutes. Simulations show that the resulting tsunami waves were able to destabilize soft marine sediments across the Ionian Sea floor. This generated the well-known, sporadically located, ``homogenite'' deposits of the Ionian Sea, and the widespread megaturbidite deposits of the Ionian and Sirte Abyssal Plains. It is possible that, ~8 ka B.P., the Neolithic village of Atlit-Yam (Israel) was abandoned because of impact by the same Etna tsunami. Two other Pleistocenic megaturbidite deposits of the Ionian Sea can be explained by previous sector collapses from the Etna area.