Historical accounts describe an earthquake and tsunami on 21 July AD 365 that destroyed cities and drowned thousands of people in coastal regions from the Nile Delta to modern-day Dubrovnik. The location and tectonic setting of this earthquake have been uncertain until now. Here, we present evidence from radiocarbon data and field observations that western Crete was lifted above sea level, by up to 10m, synchronously with the AD 365 earthquake. The distribution of uplift, combined with observations of present-day seismicity, suggest that this earthquake occurred not on the subduction interface beneath Crete, but on a fault dipping at about 30∘ within the overriding plate. Calculations of tsunami propagation show that the uplift of the sea floor associated with such an earthquake would have generated a damaging tsunami through much of the eastern Mediterranean. Measurement of the present rate of crustal shortening near Crete yields an estimate of ~5,000yr for the repeat time of tsunamigenic events on this single fault in western Crete, but if the same process takes place along the entire Hellenic subduction zone, such events may occur approximately once every 800yr.