ABSTRACT The sinistral Wegener Fault in the Nares Strait between northwest Greenland and eastern Ellesmere Island (Canadian Arctic) represents a tectonic element in the Arctic whose existence and significance have been controversial for more than 50 years. Some workers interpret the Wegener Fault as an important early Tertiary transform related to movement of the Greenland plate relative to the North American plate. Others view it as insignificant or reject its existence. While onshore studies in the Canadian portion of the northern Nares Strait region have proven the existence of important sinistral strike-slip faults related to the offshore Wegener Fault, the southern continuation of the Wegener Fault in the southern Kane Basin and Smith Sound is unclear. In particular, Smith Sound has been interpreted as a location of an undisturbed continuation of the Proterozoic basement from Greenland to Ellesmere Island, with only one possible location of the Wegener Fault near the east coast of Ellesmere Island. Our structural studies along the west coast of Smith Sound and adjacent areas of eastern Ellesmere Island suggest a three-phase tectonic evolution. Phase 1 is a brittle deformation (strike-slip faults, partly as conjugate sets) that took place under ~NW–SE shortening. It also occurs at the Smith Sound coast and did not affect the Paleogene deposits. Structures of this phase are assigned to the Paleocene and can be related to the Wegener Fault in the offshore area of Smith Sound just east of the eastern coast of Ellesmere Island. Deposition of thick conglomerates of the Paleocene Cape Lawrence Formation and relatively younger clastic sediments of the Eureka Sound Group (Paleocene–?Eocene) is interpreted to be related to local depocenters associated with the sinistral Wegener Fault. Following uplift and subsidence during normal faulting associated with Phase 2 deformation, younger contractional deformation under ~NE–SW shortening (strike-slip faults, partly as conjugate sets) of Phase 3 deformation also affected the Paleogene deposits. Phases 2 and 3 can both be assigned to the Eocene. Our interpretation points to a polyphase deformational history in the early Paleogene, which partly interfered with deposition of Paleogene clastic sediments. The first deformational phase in the Paleocene is related to the sinistral Wegener Fault, which, in the offshore areas, is not interpreted as a distinct through-going plane but as displaced by ~W–E striking faults. Therefore, our observation and interpretation support the existence of this fault in the southern Nares Strait region, east of the Ellesmere Island coast in Smith Sound.