A buried mixed contourite–turbidite system has been identified in the Pliocene succession of the Algarve basin in the northern Gulf of Cadiz. This margin is currently dominated by the Mediterranean Outflow Water and associated contourite deposition. Analysis of seismic data along with careful geographical and oceanographic reconstructions of the margin show the gradual move from a turbidite-dominated towards a contourite-dominated margin, and the subsequent ‘birth’ of an impressive elongate mounded contourite drift system- the Faro-Albufeira drifts. The contourite drift can be distinguished from down-slope (turbiditic and mass transport deposits) based on the acoustic character, distribution analysis and through careful margin reconstruction. In the earliest Pliocene, Seismic Unit P1 has been interpreted as a dominant down-slope (most likely turbidite) system sourced mainly from the northeast. There is clear evidence of contourite reworking at Seismic Unit P2, where upslope progradation and a sheeted morphology are observed. High amplitude reflections are thought to be a result of more vigorous bottom currents in the early Upper Pliocene that were capable to redistributing coarser sediments. However, in the northeast of the study area a thick sequence of chaotic seismic facies has been interpreted as mass transport deposits sourced from the north indicate that the bottom currents were unable to dominate over the entire margin due to high down-slope clastic influx. Semi-transparent Seismic Unit P3 indicates that the Upper Pliocene initially experienced a reduction in bottom current intensity; however upslope progradation shows that a mixed system was maintained. Above the Base Quaternary Discontinuity (ca. 2.6 Ma), highly erosive discontinuities and high amplitude seismic reflections are evidence of pronounced intensification of the Mediterranean Outflow Water and a move to a fully contourite-dominated slope. Mixed turbidite–contourite systems such as the one identified in the Algarve Basin could provide impressive petroleum potential where downslope clastics are winnowed and reworked by bottom water currents to leave good reservoir properties. Here, we present a conceptual model for sheeted drifts as hydrocarbon reservoirs in the subsurface.