Alfama,
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One of the oldest areas of Lisbon is Alfama. Originally it has been largely formed by the Arabs that were in the Iberian peninsula in the 8th century indeed, its name originally derives from Arab. The quarter is now a bit rundown, but it still attracts a lot of visitors, and rightly so. Dominated by the Castelo Sao Jorge, the Alfama district is probably the most picturesque area of modern-day Lisbon. 
Walking up one of its many stairs, enjoying the beautiful violet, red and yellow flowers and palm trees brings you to Miradouro de Santa Luzia, which offers a good view over the lower parts of Alfama and the River Tago. Moreover, it has some of the typical Portuguese blue and white ceramics on the walls of the Santa Luzia church. From here, it is a short walk up to the Castelo Sao Jorge
If you're tired of walking, there is always the street cars that can take you up - but also if you prefer to walk, the tram is anyway a sight in itself as it works its way up the narrow streets. To go down, take one of the stair-streets where no traffic can come, and get the impression of stepping back in time. Old people are looking away in a distance over the river Tago, thinking about the past, while the youth plays it out on the streets.
