Abstract The Mw 7.6 Muzaffarabad earthquake of 8 October 2005, occurred on a lateral equivalent of the main ramp of the Hymalaia frontal thrust, and is the result of the collision tectonics between the Indian and Eurasian plates. The epicentre was located near the town of Basantkot (Muzaffarabad), and the focal depth was about 13 km. The Muzaffarabad earthquake provides unequivocal evidence about the localization of severe damage, intense ground shaking and secondary environmental effects near the surface expression of the source fault. We analyse its nature, and impact on man-made structures and the physical environment, on the basis of a detailed survey and macroseismic study of the affected areas conducted by the Micro Seismic Studies Programme (MSSP) Team (Ishfaq Ahmad Research Laboratories, Pakistan Atomic Energy Commission) immediately after the mainshock, assisted by a careful review of the subsequent data and literature. In the course of the field survey, the displacement and surface expression of the causative fault, and accompanying secondary environmental effects were observed at a number of places along a capable thrust fault structure. We refer to this structure as the Kashmir Thrust (KT) capable fault following the terminology of local research geologists in Pakistan; the seismological evidence of this structure is already known in the literature as the Indus–Kohistan Seismic Zone. A complex, clearly segmented, at least 112-km-long surface rupture was mapped along the KT. The maximum values of vertical displacement (on the order of 4 to 7 m) were observed mainly between Muzaffarabad and Balakot, along the central segment of the rupture (52 km) associated with maximum slip at depth and a major portion of the energy release. Both the NW Alai segment (38 km) and SE Bagh segment (22 km) are characterized by scattered minor surface ruptures with a few centimetres of displacement, accompanied by extensive surface cracking, landslides and severe damage, concentrated in a narrow belt along the fault trace. A maximum intensity of XI on the Modified Mercalli Intensity (MMI) scale and on the Environmental Seismic Intensity scale (ESI 2007) was recorded in the epicentral area between Muzaffarabad and Balakot. Extremely severe damage and very important secondary environmental effects in the hanging wall adjacent to the trace of the causative fault plane are mainly due to near-fault strong motion and rupture directivity effects. To our knowledge, this is the first study to present field observations over the whole near-field of the earthquake, and to include the intensity map of the entire meizoseismal region.