The Nicaraguan earthquake of September 2, 1992 excited large tsunamis which caused significant damage along the Nicaraguan coasts. Some of the inhabitants felt only minimal shock before the tsunami arrived, indicating that excitation of short‐period seismic waves was very small. Numerical simulation with the initial tsunami source estimated by the seismic data is carried out to study the characteristics of the tsunami source by comparing the calculated data with the measured data along the Nicaraguan coast. Finding of the comparison shows that the dislocation of the fault estimated from the measured data is 5.6 to 10.0 times larger than that from seismic data. The tsunami source area, which is 200km in length × 100km in width, is used to explain the distribution of measured tsunami heights along the coast and the wave period as shown in the tide record at Corinto. The effect of rise time on tsunami excitation indicates a slow process, which corresponds with the seismic waves. This event falls under the tsunami earthquake category to produces anomalously large tsunamis relative to earthquake magnitude.