Fernando Manuel Costa Santos was born in Lisbon on 10 October 1954. A left-back, he made his top-flight debut for Estoril in September 1975 and played 161 matches in the Primeira Liga for Estoril and Marítimo, and at the same time qualified as an electrical and telecommunications engineer at the Instituto Superior de Engenharia de Lisboa in 1977, which earned him the nickname by which he is still known in Portugal, "o Engenheiro". He coached Estoril and Estrela da Amadora before taking charge of FC Porto from 1998 to 2001, winning the championship of 1998/99, two Taças de Portugal and two Supertaças, and then worked at AEK Athens, Panathinaikos and Sporting.

Benfica appointed him in May 2006 to succeed Ronald Koeman. He took charge of 49 matches and won nothing. In 2006/07 Benfica finished third behind Porto and Sporting, went out of the Champions League at the group stage and then out of the UEFA Cup, and he was dismissed in August 2007 after only two matches of the following season, the last a 1-1 draw at Leixões.

He was already the pragmatist he would later be famous for being: a solid defensive structure, few risks in possession and a game plan built around not losing. It did not satisfy Benfica, but it made him one of the most successful international coaches of his generation. He took charge of Greece from 2010 to 2014, reaching the last sixteen of the World Cup, and then of Portugal from 2014 to 2022, winning the European Championship in 2016 and the Nations League in 2019, the first major trophies in the country's history. He later coached Poland, Beşiktaş and Azerbaijan.