Abstract The southern Altiplano rift basin forms part of the Cretaceous rift system that extends from Peru to northwestern Argentina. Seismic and potential field data suggest that basin formation was controlled by a preexisting structural grain consisting of northwest-southeast and northeast-southwest tectonic lineaments within a Precambrian-Paleozoic basement. Variable extension was achieved through transfer fault zones that coincide with northwest-southeast trending lineaments. Rift subsidence can be divided into an early rift (Berriasian- Cenomanian) and a late rift episode (Turonian-Campanian) with a total accumulation of up to 1000 m of sandstones and shales. A period of tectonic quiescence followed that resulted in a regional sag basin characterized by thin-bedded, calcareous lacustrine deposits. This sequence includes the oil-prone shales and reservoir carbonates of the El Molino Formation, which has been correlated with the hydrocarbon-producing Yacoraite Formation in northwestern Argentina. At the beginning of the Tertiary, rift-related subsidence had ceased and was gradually replaced by subsidence resulting from Andean compression. An Eocene unconformity marks the subtle change to this new episode of basin formation. This was followed by a major Oligocene unconformity that characterizes the onset of increased subsidence rates related to the emplacement of large thrust sheets of the Eastern Cordillera. More than 4 km of synorogenic sediments accumulated in the adjacent Altiplano foredeep. Inversion of the Cretaceous rift structures took place during this compressional phase. In the southern Altiplano, this inversion resulted in hydrocarbon traps similar to those in the rift basins of northwestern Argentina.