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Few cities have such an invigorating way of welcoming a newcomer, especially if you have arrived early in the morning after a transatlantic flight and your hotel room won't be ready for hours: Ride Lisbon's century-old tram.

The toy-like wooden trolley I boarded in Praca Luis de Camoes is more like a midway ride than a typical commuter trek. With a clang of the bell, the steel wheels grind into the tracks and propel the few Sunday-morning passengers up a steep and twisting street. Dozing isn't an option: Each curve presents new and startling views as we climb into the Bairro Alto, the once seedy, now trendy part of town that I have come here to explore.

The first impression that comes with this early-morning ride on Tram 28 is that Lisbon is the Atlantic's answer to San Francisco. Then around the next bend the tram rises above the city: Ponte 25 de Abril suspends a graceful arc where the Tagus River widens into the sea and it looks like a copy of the Golden Gate bridge, complete with vermilion towers.

Lisbon is an ancient city that once ruled a considerable chunk of the planet. Its accumulated wealth is still evident today, but an earthquake - another echo of San Francisco - wiped out a large part of it in 1755. Since the Bairro Alto was spared the subsequent tidal wave and fire, its medieval character of low buildings and narrow lanes remained intact.

By day, the bairro is a quiet village where laundry hangs above graffiti-strewn streets. There are local grocery shops and storefront businesses that deal in antiques, interior furnishings and used books. The ateliers of young fashion designers are crammed with sewing machines and pattern-cutting tables that bump up against the display racks.

This traffic-free maze is quiet and ideal for poking around with plenty of bars to grab a refuelling bica, or espresso, and the famous custard tart of Lisbon, the pasteis de Belem. (Although you may want to make a pilgrimage, as many do, to the waterfront Antiga Confeitaria de Belem, where this confection was invented in 1837 and which is still going strong today, churning out as many as 30,000 pastries on any given Sunday.)

Lisbon is said to be built on seven hills, although it feels as though there are many more than that. Apart from the upscale Chiado and Baixa neighbourhoods, where grand squares spill onto the wide riverbank, one is always walking either up or down. The seven hills make for a tenuous link to an event to be held in Lisbon today, when the New 7 Wonders of the World will be announced at a spectacle staged in the Estádio da Luz, home to Lisbon's Benfica soccer team. A mixed bag of celebrities including Jose Carreras, Ben Kingsley, Chaka Khan and Neil Armstrong will make appearances for the announcement, the culmination of a worldwide public vote. The organizers said Portugal is a neutral host because it has no landmarks in the running against such candidates as the Eiffel Tower, the Acropolis and Stonehenge.

This event is the latest attraction in a city that in the past decade hosted the high-profile Expo 98 and the 2004 European Cup soccer championship, both of which have left a legacy that has changed the look and feel of Lisbon.

But it's just a climb away to step back from the modern city and into the past. And in Lisbon, memories are carried on the wave of a song.

Fado is the heartbeat of the city, and the bairro is where these mournful melodies are crooned in dive-like tascas, smart restaurants and tourist traps.

This traditional music is making a comeback and vies for the young ears of scenesters who have turned the bairro into the hottest night scene in town, hopping from jazz club to DJ nights to fado before calling it a late night, for which Lisbon is also famous.

Fado means "fate" in Portuguese and even if you don't speak the language, recognizable words like triste, angosh, soffrire and saudade are staples of the vernacular songbook. The swooning songs send a message of sorrow and loss. A lone singer is typically accompanied by a guitarra, a 12-string Portuguese guitar similar to a mandolin, and a viola, an acoustic Spanish guitar.

Though its origins are vague and may have come from Brazil or North Africa, by the mid-1800s fado was strongly associated with seedy Lisbon before being taken up by the bourgeoisie and, in the 20th century, popularized as part of the national identity. Young stars like Mariza have made fado an international phenomenon today.

The bairro is full of fado taverns, and singers often roam from one to the next, sometimes with fans in tow. Marta Mateus, a young singer, stops by Caldo Verde to listen and then lead the crowd in a sing-along. "For me fado's origins are like punk rock, songs of the people about street life and nightlife. It's Portuguese roots music." She calls her interpretation a form of "fado-ska."

It's past 3 a.m. when the singers decide to call it quits. Crowds spill into the cobblestone streets, many heading to bars that will be open until 6 a.m. Three more hours of drinking would put me in a worse state than an overseas flight before riding the tram. So I walk back to Rua Loreto and follow the narrow tram tracks as the first smudge of dawn appears across the Tagus.

Pack your bags

MEMORABLE MOMENT

Take the free-standing, faux Gothic and truly bizarre Elevador de Santa Justa, one of Lisbon's most beloved landmarks, up Bairro Alto.

STRESS FACTOR

The drug dealers come out at night in the bairro. They are more of a nuisance than a threat.

GETTING THERE

Air Transat and SATA have direct flights to Lisbon from Canada. The author travelled as a guest of the Portuguese Trade and Tourism Commission.

WHERE TO STAY

Bairro Alto Hotel: 8 Praça Luis de Camoes; 351 (21) 340-8288; http://www.bairroaltohotel.com. This 55-room hotel was Lisbon's first boutique property. Rates from $430.

Hotel Principe Real: 53 Rua da Alegria; 351 (21) 340-7350; http://www.hotelprincipereal.com. Rates from $136.

WHERE TO EAT AND DRINK

Antigo Restaurante 1 de Maio: 51 Rua da Atalaia; 351 (21) 342-6840.

Caldo Verde: 40 Travessa do Poco da Cidade; 351 (21) 342-2091.THINGS TO DO

Oceanario de Lisboa Esplanada Dom Carlos I; (351) 21 891 7006; http://www.oceanario.pt. Built for Expo 98, this riverside destination offers a fascinating view of ocean life.

ARMCHAIR IQ

Wim Wender's Lisbon Story (1994) is as close as it gets to a travelogue about the city and the bairro, in particular, including a scene on the iconic Tram 28.

MORE INFORMATION

For more information, visit http://www.visitportugal.com.