The dynamics of the erosive central Andean forearc vary significantly along strike. In northern Chile at 20°S–27°S, and particularly at 22°S–25°S, the forearc in the Coastal Cordillera has been undergoing extension since at least the Pliocene, reactivating steep E-dipping faults of the Mesozoic Atacama fault system. This has been explained by forearc uplift driven by underplating, shallow slab dip, subduction of bathymetric features, and elastic rebound during the earthquake cycle. These processes, however, are active over a much wider area of the central Andean forearc than Coastal Cordillera extension and therefore cannot explain why extension is localized to the northern Chilean onshore outer forearc. We compiled crustal seismicity and the depth of lithospheric boundaries from existing studies to investigate other possible explanations for onshore forearc extension. At 22°S–25°S, seismicity increases above the background subduction-related level present to the north and south. Extensional focal mechanisms, consistent with steep E-dipping faults active at depths up to ~40 km, are also present onshore within this latitude range, but absent to the north and south; this is consistent with the distribution of mapped active fault scarps. The Salar de Atacama crust is seismically active at depths up to ~40 km. Thick lithosphere is present beneath the forearc, and the longitudinal axis of thickest lithosphere is deflected to the east at the latitude of the Salar de Atacama. To the east, the Puna Plateau lithosphere has been thinned by lithospheric removal events. The most robust correlation with onshore forearc extension is the thick, cold, strong crust and mantle lithosphere beneath the anomalous Salar de Atacama in the inner forearc of northern Chile. The combination of underplating-driven outer forearc uplift, the presence of the preexisting structure of the Atacama fault system favorable for reactivation, and the negative buoyancy beneath the Salar de Atacama is inferred to drive Coastal Cordillera normal faulting at this latitude. Recent (<10 Ma) lithospheric removal beneath the Puna Plateau to the east may have enhanced the effect of the negatively buoyant Salar de Atacama lithosphere on the forearc. This implies that both preexisting lithospheric structure and lithospheric processes in the hinterland may influence forearc dynamics.