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We used 10 years of data on clutch size, egg size and diet, and 8 years of data on timing of laying on Little Terns (Sternula albifrons) breeding in Ria Formosa lagoon system, Algarve, Portugal to assess whether diet acts as an important intermediary between climatic conditions and breeding parameters. We used Generalized Linear Models to relate (1) the relative occurrence and size of the main prey species, sand smelts (Atherina spp.), with environmental variables, a large-scale climate variable, the North Atlantic Oscillation (NAO) index, and a local scale variable, the sea-surface temperature (SST), and (2) the respective effects of sand smelts relative occurrence, NAO index and SST on Little Tern breeding parameters. The diet of Little Terns was dominated by sand smelts, with a frequency occurrence of over 60% in all years. The winter SST (February) was negatively associated with the relative occurrence of sand smelts in the diet of Little Terns during the breeding season which, in turn, was positively associated with Little Tern clutch size. Our results suggest that negative NAO conditions in the Atlantic Ocean, often associated with rougher sea conditions (greater vertical mixing, stronger winds and lower SST) were related with earlier breeding, and lower SST in the surroundings of the colony during winterespring favour the abundance of prey fish for Little Terns as well as their reproductive parameters. Climate patterns at both large and local scales are likely to change in the future, which may have important implications for estuarine seabirds in Southern Europe.