Evidence for three short‐lived compressive episodes of late Carixian, late Callovian–early Oxfordian, and Tithonian‐Berriasian ages that lasted <5 m.yr. and occurred during the process of rifting of the Algarve Basin is presented. These tectonic‐inversion episodes are described at outcrop and cartographic scales and have been dated with the accuracy provided by the ammonoid scale. An uplift event of late Toarcian–Aalenian age of undetermined tectonic origin is also described. We show that these four tectonic episodes coincide in time with important ecological events, such as the onset of migration and/or the segregation of Boreal and Tethyan ammonite species and the confinement of the Algarve Basin. Stratigraphic and paleoecological data from the Algarve and Lusitanian Basins are compared and discussed together with eustatic and tectonic information. We propose that the tectonic‐inversion episodes that caused uplift are the origin of the Mesozoic sedimentary gaps and the intermittent opening and closure of the seaway located offshore the SW corner of Iberia between the Algarve and Lusitanian Basins (i.e., a seaway between the Boreal and Tethyan realms). Three tectonic mechanisms for the origin of these short‐lived compressive episodes are presented after comparing the tectonic setting of the Algarve Basin with other geological provinces of the world where similar phenomena also occurred.