The Sisters shear zone is a newly discovered Late Cretaceous detachment fault system exposed for 40 km along the southeast coast of Stewart Island, southernmost New Zealand. Footwall rocks consist of variably deformed ca. 310 and 105 Ma granites that range from undeformed to protomylonite, mylonite, and ultramylonite. The hanging wall includes non-marine conglomerate and brittley deformed granite. K-feldspar thermochronometry of the footwall indicates moderately rapid cooling (20–30 C°/m.y.) due to tectonic denudation over the interval ca. 89–82 Ma. Return to slow cooling at 82 Ma coincides with the age of the oldest seafloor adjacent to the Campbell Plateau and reflects the mechanical transition from continental extension to lithospheric rupture and formation of the Pacific-Antarctic Ridge. Our findings support a two-stage rift model for continental breakup of this part of the Gondwana margin. Stage one (ca. 101–88 Ma) is the northward propagation of continental extension and the Tasman Ridge as recorded in mylonite dredged from the Ross Sea and the Paparoa core complex. Stage two (ca. 89–82 Ma) is extension between the Campbell Plateau and West Antarctica leading to formation of the Pacific-Antarctic Ridge.