Triassic to Lower Jurassic deposits known as the Silves Group in the Algarve, southern Portugal, have been studied for over 150 years. However, many of this unit’s sedimentological, stratigraphical, and palaeontological aspects remain poorly documented. Here, we present novel observations on sedimentology, stratigraphy, taphonomy, and fauna at the Rocha da Pena site, located in the central part of the Algarve Basin. The investigated sequence is established to correspond to the upper part of the Silves Group. The mudstone, calcrete, and palustrine carbonate facies comprise most of the sequence thickness and are interpreted as having been deposited within coastal alluvial mudflats to palustrine settings under semi-arid and seasonal climates. The overlying siltstone and sandstone facies indicate an environmental shift towards tidally influenced environments, subsequently covered by the latest Triassic to earliest Jurassic volcaniclastics and basaltic lava flows. Furthermore, novel faunal elements, including actinopterygian and unionoid bivalves, are described from mudstone layers. New fossiliferous beds are identified within palustrine facies that yield numerous but poorly preserved materials assigned to cyamodontoid placodonts, hybodont sharks, and actinopterygians. The poor preservation of the remains is attributed to the pedogenetic processes prevalent in the palustrine depositional setting. A distinct faunal composition between the mudstone and palustrine facies is observed. It is preliminarily hypothesized to be likely linked with salinity fluctuations, but sampling bias cannot currently be excluded. The recovered vertebrate fauna aligns most closely with the Carnian and, to a lesser extent, the Norian fossil record. Nonetheless, the precise age of the fossil-bearing levels remains uncertain and can currently be reliably constrained to the upper Carnian–Rhaetian interval. Consequently, this work provides new insights into the palaeoenvironmental evolution of the western Tethys margin during the Late Triassic and highlights the relevance of the Silves Group in reconstructing coastal-continental ecosystem dynamics in southwestern Iberia.Triassic to Lower Jurassic deposits known as the Silves Group in the Algarve, southern Portugal, have been studied for over 150 years. However, many of this unit’s sedimentological, stratigraphical, and palaeontological aspects remain poorly documented. Here, we present novel observations on sedimentology, stratigraphy, taphonomy, and fauna at the Rocha da Pena site, located in the central part of the Algarve Basin. The investigated sequence is established to correspond to the upper part of the Silves Group. The mudstone, calcrete, and palustrine carbonate facies comprise most of the sequence thickness and are interpreted as having been deposited within coastal alluvial mudflats to palustrine settings under semi-arid and seasonal climates. The overlying siltstone and sandstone facies indicate an environmental shift towards tidally influenced environments, subsequently covered by the latest Triassic to earliest Jurassic volcaniclastics and basaltic lava flows. Furthermore, novel faunal elements, including actinopterygian and unionoid bivalves, are described from mudstone layers. New fossiliferous beds are identified within palustrine facies that yield numerous but poorly preserved materials assigned to cyamodontoid placodonts, hybodont sharks, and actinopterygians. The poor preservation of the remains is attributed to the pedogenetic processes prevalent in the palustrine depositional setting. A distinct faunal composition between the mudstone and palustrine facies is observed. It is preliminarily hypothesized to be likely linked with salinity fluctuations, but sampling bias cannot currently be excluded. The recovered vertebrate fauna aligns most closely with the Carnian and, to a lesser extent, the Norian fossil record. Nonetheless, the precise age of the fossil-bearing levels remains uncertain and can currently be reliably constrained to the upper Carnian–Rhaetian interval. Consequently, this work provides new insights into the palaeoenvironmental evolution of the western Tethys margin during the Late Triassic and highlights the relevance of the Silves Group in reconstructing coastal-continental ecosystem dynamics in southwestern Iberia.