The 18 November 1867 Virgin Island earthquake and the tsunami that closely followed caused considerable loss of life and damage in several places in the northeast Caribbean region. The earthquake was likely a manifestation of the complex tectonic deformation of the Anegada Passage, which cuts across the Antilles island arc between the Virgin Islands and the Lesser Antilles. In this article, we attempt to characterize the 1867 earthquake with respect to fault orientation, rake, dip, fault dimensions, and first tsunami wave propagating phase, using tsunami simulations that employ high-resolution multibeam bathymetry. In addition, we present new geophysical and geological observations from the region of the suggested earthquake source. Results of our tsunami simulations based on relative amplitude comparison limit the earthquake source to be along the northern wall of the Virgin Islands basin, as suggested by Reid and Taber (1920), or on the carbonate platform north of the basin, and not in the Virgin Islands basin, as commonly assumed. The numerical simulations suggest the 1867 fault was striking 120°–135° and had a mixed normal and left-lateral motion. First propagating wave phase analysis suggests a fault striking 300°–315° is also possible. The best-fitting rupture length was found to be relatively small (50 km), probably indicating the earthquake had a moment magnitude of ∼7.2. Detailed multibeam echo sounder surveys of the Anegada Passage bathymetry between St. Croix and St. Thomas reveal a scarp, which cuts the northern wall of the Virgin Islands basin. High-resolution seismic profiles further indicate it to be a reasonable fault candidate. However, the fault orientation and the orientation of other subparallel faults in the area are more compatible with right-lateral motion. For the other possible source region, no clear disruption in the bathymetry or seismic profiles was found on the carbonate platform north of the basin.