The Rheic Ocean is widely believed to have formed in the Late Cambrian–Early Ordovician as a result of the drift of peri-Gondwanan terranes, such as Avalonia and Carolina, from the northern margin of Gondwana, and to have been consumed in the Devonian Carboniferous by continent-continent collision during the formation of Pangea. Other peri-Gondwanan terranes (e.g., Armorica, Ossa-Morena, northwest Iberia, Saxo-Thuringia, Moldanubia) remained along the Gondwanan margin at the time of Rheic Ocean formation. Differences in the Neoproterozoic histories of these peri-Gondwanan terranes suggest the location of the Rheic Ocean rift may have been inherited from Neoproterozoic lithospheric structures formed by the accretion and dispersal of peri-Gondwanan terranes along the northern Gondwanan margin prior to Rheic Ocean opening.

Avalonia and Carolina have Sm-Nd isotopic characteristics indicative of recycling of a juvenile ca. 1 Ga source, and they were accreted to the northern Gondwanan margin prior to voluminous late Neoproterozoic arc magmatism. In contrast, Sm-Nd isotopic characteristics of most other peri-Gondwanan terranes closely match those of Eburnian basement, suggesting they reflect recycling of ancient (2 Ga) West African crust. The basements of terranes initially rifted from Gondwana to form the Rheic Ocean were those that had previously accreted during Neoproterozoic orogenesis, suggesting the rift was located near the suture between the accreted terranes and cratonic northern Gondwana. Opening of the Rheic Ocean coincided with the onset of subduction beneath the Laurentian margin in its predecessor, the Iapetus Ocean, suggesting geodynamic linkages between the destruction of the Iapetus Ocean and the creation of the Rheic Ocean.

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