Previously Portugal had never got above the sixth place that it reached in 1996.
It was a triumph for "brand Portugal", music journalist and advertising executive Manuel Falcao told the BBC.
"The Portuguese language is present worldwide but sometimes it's hard for the national identity to make an impression, so for the brand this is very nice - people are very happy," he said.
The timing was fortunate for Portugal, as the nation shows signs of recovery from the 2008 financial crisis and a massive bailout from its eurozone partners.
"Polls show people are more optimistic here than three years ago, the economic indicators are not strong but positive - even by EU standards," Mr Falcao said.
Eurovision success "coincided with a good mood in Portugal - we won the Euro 2016 football championship and tourism here is beating all records", he said.
He cautioned, however, that one song would not make a radical difference.
It was a doubly memorable weekend for Portugal, as Pope Francis drew a vast crowd to the Fatima shrine, where he made saints of two Portuguese children. Their visions of the Virgin Mary in 1917 turned Fatima into a top Catholic pilgrimage site.
'The language was music'
There is national pride that Sobral's song Amar Pelos Dois touched so many hearts, in a competition dominated by English lyrics.
"The language, more than the Portuguese language, was music," Sobral said.
The song was crafted by his sister Luisa, an accomplished singer-songwriter and music college graduate, with several CDs to her name.
A fellow Portuguese music expert, Sofia Vieira Lopes, said the song's triumph proved that lyrics were not fundamental to a musical message.
"It shows that it's not necessary to sing in English to understand the music," she told Portugal's Publico daily.
Salvador Sobral criticised the commercialisation of pop, after his Saturday night triumph in Ukraine, speaking contemptuously of "fast-food music".
"This is a vote for people who actually mean something with their music," he said. "Music is not fireworks, music is feeling."
'I beg you to come back'
The state tourism authority, Turismo de Portugal, is thrilled by the boost to the country's image.
"We are in the spotlight," its president Luis Araujo told the daily Diario de Noticias (DN). He characterised the winning song as "simplicity, transparency, honesty".
The melancholy, bittersweet lyrics include the lines: "My darling, listen to my prayers / I beg you to come back, come back to love me / I know we can't love alone."
There was a poignancy to Sobral's performance, as he has struggled with a serious heart condition.
His success shows there is still a market for national musical traditions, despite the dominance of Anglo-American pop culture.
Portugal requires broadcasters to observe a quota of Portuguese-language songs. France and Spain have similar quotas, to showcase home-grown talent.
Even before the Eurovision final Sobral's song was hugely popular in Portugal, Mr Falcao said.
Yet English remains the default pop language, even in Portugal, he said.
And Salvador Sobral himself has recorded covers of American hits - in English.