Abstract. On 28 September 2018, a strike‐slip earthquake occurred in Palu, Indonesia, and was followed by a series of tsunami waves that devastated the coast of Palu Bay. The tsunami was recorded at the Pantoloan tide gauge station with a peak amplitude of ~2 m above the water level and struck at high tide. We use the Pantoloan tsunami waveform and synthetic aperture rada displacement data in a joint inversion to estimate the vertical displacement around the narrow bay. Our inversion result suggests that the middle of the bay was uplifted up to 0.8 m, while the other parts of the bay subsided by up to 1 m. However, this seafloor displacement model alone cannot fully explain the observed tsunami inundation. The observed tsunami inundation heights and extents could be reproduced by a tsunami inundation simulation with a source model that combined the estimated vertical displacement with multiple subaerial‐submarine landslides.