We investigate an early nineteenth‐century earthquake that has been previously cataloged but not previously investigated in detail or recognized as a significant event. The earthquake struck at approximately 4:30 a.m. LT on 8 January 1817 and was widely felt throughout the southeastern and mid‐Atlantic United States. Around 11:00 a.m. the same day, an eyewitness described a 12‐inch tide that rose abruptly and agitated boats on the Delaware River near Philadelphia. We show that the timing of this tide is consistent with the predicted travel time for a tsunami generated by an offshore earthquake 6–7 hours earlier. By combining constraints provided by the shaking intensity distribution and the tsunami observation, we conclude that the 1817 earthquake had a magnitude of low‐ to mid‐M 7 and a location 800–1000 km offshore of South Carolina. Our results suggest that poorly understood offshore source zones might represent a previously unrecognized hazard to the southern and mid‐Atlantic coast. Both observational and modeling results indicate that potential tsunami hazard within Delaware Bay merits consideration: the simple geometry of the bay appears to catch and focus tsunami waves. Our preferred location for the 1817 earthquake is along a diffuse northeast‐trending zone defined by instrumentally recorded and historical earthquakes. The seismotectonic framework for this region remains enigmatic.