Portugal uses the euro (symbol: €), code EUR.
Banknotes come in denominations of 500, 200, 100, 50, 20, 10 and 5 euro. Euro is subdivided into 100 cents. Coins come in denominations of 2 and 1 euros and 50, 20, 10, 5, 2 and 1 cents.
Note that while euro coins each have a national side (indicating where they were minted), they are perfectly good in any country that uses the euro currency.
You'll get the best exchange using an ATM after you arrive - ideally at the airport itself. Do not use exchange booths (Forex, Travelex etc.) as they have lousy exchange rates. That being said, it's wise to have at least some cash before-hand in case of emergency (ATM not working etc.).
Coins can be hard or simply impossible to change back to dollar when you leave a country. Before leaving, spend them (on postcards, a newspaper, or food or drink for the train ride), change them into banknotes, or give them away.
If you have some euros left at the end of your trip, change it to dollar at the airport or simply spend it at the airport before you fly home.