The Sydney Basin covers a large offshore area south of Newfoundland, with a well-exposed outcrop belt on Cape Breton Island. The geological history of the poorly known offshore area is interpreted using an industry seismic grid and Lithoprobe line 86-5, tied to outcrops and two wells. The mid-Devonian to Upper Carboniferous – Permian basin fill is 6–7 km thick and represents three extensional phases with intervening and succeeding compressive phases. The mid-Devonian McAdams Lake Formation was deposited in a local half-graben during early post-Acadian extension. Following deformation, a suite of Early Carboniferous extensional basins filled mainly with Horton Group conglomerates developed on northeast-trending and southeast-dipping master faults. Some faults developed along Acadian terrane boundaries. The Windsor Group extends over the master faults to onlap basement as a result of thermal sag and Visean eustatic rise. Mid-Carboniferous deformation, linked to the Alleghanian orogeny, reactivated faults and caused basin inversion and a basinwide unconformity. Upper Carboniferous to? Permian coal measures and redbeds were subsequently deposited in a broad basin that developed over the Early Carboniferous basins. Subsidence may reflect extension on major faults in the Cabot Strait coupled with thermal sag and (or) continued sag on an underlying mid-crustal detachment. After coalification, Acadian terrane boundaries and other lineaments were reactivated during a compressive tectonic episode, probably during the Permian. The basin’s polycyclic history, with repeated subsidence and inversion phases, has important implications for hydrocarbon systems.