Estimates of the initial size of tsunamis generated by subduction zone earthquakes are significantly affected by the choice of shear modulus at shallow depths. Analysis of over 360 circum-Pacific subduction zone earthquakes indicates that for a given seismic moment, source duration increases significantly with decreasing depth (Bilek and Lay, 1998; 1999). Under the assumption that stress drop is constant, the increase of source duration is explained by a 5-fold reduction of shear modulus from depths of 20 km to 5 km. This much lower value of shear modulus at shallow depths in comparison to standard earth models has the effect of increasing the amount of slip estimated from seismic moment determinations, thereby increasing tsunami amplitude. The effect of using depth dependent shear modulus values is tested by modeling the tsunami from the 1992 Nicaraguan tsunami earthquake using a previously determined moment distribution (Ihmlé, 1996a). We find that the tide gauge record of this tsunami is well matched by synthetics created using the depth dependent shear modulus and moment distribution. Because excitation of seismic waves also depends on elastic heterogeneity, it is important, particularly for the inversion of short period waves, that a consistent seismic/tsunami shear modulus model be used for calculating slip distributions.