The basaltic pillow lavas in the Liuyuan region of NW China, considered to be part of an ophiolitic suite, have been central to the models on tectonic setting, evolution and timing of the final closure of the Palaeo-Asian Ocean. New field evidence on the sedimentary units associated with the basalts reveals comparable sequences in the northern and southern flanks of the Liuyuan Volcanic Belt with coarse to fine sediments from periphery to the centre. The dacites and rhyolites formed coevally with the pillow basalts. The pillow basalts are interlayered with lacustrine sandstone, claystone and clayey lake deposits. Detrital zircons from these sediments yield zircon U–Pb ages of 291–285 Ma. Andesites, dacites and rhyolites from the basaltic sequence yield U–Pb ages of 280–277 Ma, similar to the 282–280 Ma ages of gabbros that intrude the pillow lavas. All these rocks cover the 460–440 Ma granite and greenschist basement and have been intruded by gabbros of c. 272 Ma age, with subsequent (230–227 Ma) north–south contractional thrusting and folding. The data from our study are incompatible with the existing models that consider the basalts as part of an ophiolitic suite. Along the northern continental margin of China from west to east, the Tarim, Dunhuang-Alxa and North China cratonic areas all show evidence for regional extension through rifting during early–middle Permian time. These rift features and basaltic eruptions occurred coevally with the assembly of various microcontinental blocks against the Siberian craton at c. 300–250 Ma, synchronous with amalgamation of the Central Asian Orogenic Belt (CAOB) on the northern side of the Liuyuan Rift. These events were also broadly synchronous with formation of the global supercontinent Pangea.