We describe the geometry and kinematics of a Jurassic to Early Cretaceous transpressive sinistral strike-slip system within a metamorphic basement inlier of the Mesozoic magmatic arc near Bahia Agua Dulce at latitudes 31–32°S in north-central Chile and discuss possible relations with the Atacama Fault System further north. Sinistral transpression overprints structures of an accretionary system that is represented by the metamorphic basement. Sub-vertical semi-ductile NNW-striking strike-slip shear zones are the most conspicuous structures. Chlorite and sericite grew, and white mica and quartz dynamically recrystallized, suggesting low-grade metamorphic conditions during semi-ductile deformation. Folds at the 10–100 metre scale developed before and during strike-slip shearing. The folds are deforming a former sub-horizontal transposition foliation that originated during prior accretion processes. The folds have axes sub-parallel to the strike-slip shear zones and sub-vertical axial surfaces indicating a component of shortening parallel to the shear-zone boundaries, suggesting an overall transpressive deformation regime. Transpressive strike-slip deformation also affects Middle Triassic (Anisian) basal breccias of the El Quereo Formation. 40Ar–39Ar laser ablation ages of synkinematically recrystallized white mica in one of the shear zones provide an age of 174–165 Ma for the waning stages of semi-ductile strike-slip shearing. The semi-ductile shear zones are cut by mafic and rhyolite dykes. Two rhyolite dykes yield 40Ar–39Ar ages of 160.5 ± 1.7 Ma and 131.9 ± 1.7 Ma, respectively. The latter dyke has been affected by brittle faulting. Fault-slip analysis shows that the kinematics of the faulting event is similar to the one of the semi-ductile shearing event, suggesting that sinistral transpression continued after ~130 Ma. Timing, kinematics and geographic position suggest that the shear zones at Bahia Agua Dulce represent a southern continuation of the prominent Atacama Fault System that affected the Jurassic/Early Cretaceous arc over its ~1400 km length.