Age estimates for the onset of a seaway through the Drake Passage range from middle Eocene to early Miocene, complicating interpretations of the relation between ocean circulation and Cenozoic global cooling. Here we present evidence for the presence of a latest Paleocene–early Eocene extensional basin (i.e., lateral rift) in Tierra del Fuego. An accurately dated postrift unconformity indicates that extensional faulting ended in the studied area ca. 49 Ma, in concurrence with a previously reported eightfold increase in South America–Antarctica separation rate, and the proposed onset of oceanic basins in the incipient Drake Passage. The coincidence of these facts indicates progressive strain concentration on the zone of future crustal separation (i.e., Drake Passage) after abandonment of lateral rifts ca. 49 Ma. Although the described extensional depocenters did not allow the exchange of water between the Pacific and Atlantic Oceans, they represent a direct indication of continental lithospheric stretching preceding the recently proposed Eocene opening of embryonic basins in the West Scotia Sea.