German police are leading an operation near the Arade dam, approximately 31 miles (50km) from Praia da Luz, where a British toddler, Madeleine McCann, went missing 16 years ago.
The operation aims to find evidence linking the disappearance to Christian Brueckner, a 45-year-old German national who became a formal suspect in 2022.
Brueckner is known to have visited the area around the time Madeleine vanished.
Sniffer dogs and divers are involved in the search, with police teams setting up tents and an inflatable boat being launched into the reservoir.
German state prosecutor Hans Christian Wolters stated that there are grounds to believe evidence could be found in the reservoir but did not disclose specific details.
Bags have been taken away from the search area, although their contents are unknown.
The Metropolitan Police from the UK is also present in Portugal to inform Madeleine's family of any developments.
This is not the first time the reservoir has been searched in connection to the investigation, with a previous search conducted in 2008 based on a tip-off.
Brueckner is treated as the main suspect in the McCann case, supported by evidence such as his mobile phone records placing him in the Praia de Luz area during the disappearance.
Brueckner is currently imprisoned in Germany for the rape of a 72-year-old woman in the same area where Madeleine went missing, and he lived near the resort at the time of the McCann family's holiday.