The Portuguese flattered to deceive and even though they boasted the world's most expensive player in their ranks with Cristiano Ronaldo, they exited the competition tamely at the hands of eventual champions Spain.
Surprisingly, manager Carlos Queiroz kept his job for the start of the Euro 2012 qualifying but was eventually replaced with Paulo Bento midway through the campaign after more questionable results followed.
The appointment of the new coach sparked a mini-revival in fortunes for the Portuguese but it was not good enough for them to qualify for Euro 2012 automatically which meant they had to navigate a tricky two-legged playoff with Bosnia-Herzegovina.
After the first leg finished goalless, Ronaldo and Company exploded for six goals in Lisbon on their way to a confidence boosting 6-2 aggregate victory.
Passage to Euro 2012 had been secured and now the fun can really begin for Portugal.
World ranking: 8 (as of November 2011).
Manager: Paulo Bento.
Can they win it?
They are certainly going to be a difficult opponent to get past if manager Paulo Bento gets his tactics right. In the past - notably under Carlos Queiroz - Portugal failed to capitalize on the full attacking talents of Cristiano Ronaldo and paid for it with early exits from the last World Cup.
By adopting an overly cautious approach - as seen in the World Cup 2010 - with Ronaldo acting as the lone striker, the Real Madrid player has yet to realize his full potential at international level. Simply put, Ronaldo can't do it on his own.
Should Portugal decide to go with a more attack minded formation at Euro 2012, there is a slim chance they could upset the applecart and go on to win the tournament. The key man is of course Ronaldo: he scored five goals in seven games during the qualification group stage and added two more goals in the playoffs against Bosnia. However, Manchester United winger Nani will almost certainly be looked upon by his international team-mates to deliver as well.
Nani, who scored a screamer in Portugal's 6-2 win over Bosnia, has been heavily involved in all of Portugal's goals (including assists) during their Euro 2012 campaign and his presence will be needed once again when the tournament starts proper next summer.
Best performance at European championships: Runners-up in 2004.