The boundary between the Xolapa and the Guerrero, Mixteca, and Juarez (or Oaxaca) terranes is a zone of normal faulting indicating north-south subhorizontal extension. Stratigraphic and geochronometric evidence dates tectonic uplift of the Xolapa terrane as Late Cretaceous and Tertiary. We propose that the Xolapa terrane represents a late Mesozoic-early Tertiary magmatic arc built near or on North American continental crust, and we discuss, as possible tectonic uplift mechanisms, (1) extension associated with back-arc rifting, (2) extension during gravitational spreading of the upper and middle crust, and (3) transtension within a strike-slip regime established during formation of the Caribbean. Both far- and near-field deformations indicate distributed transtension. Therefore, a single regional tectonic framework can account for the Mesozoic and Cenozoic geologic history of these terranes.