The development of high topography associated with the Indo-Asian collision plays a central role in ongoing debates over the linkages between development of the Tibetan Plateau and climate. In northeastern Tibet, the widespread appearance of coarse terrestrial sediment during the Oligocene is commonly interpreted to herald the development of a foreland basin in response to crustal thickening along the present-day margin of the plateau. However, a lack of direct observations relating sediment accumulation to fault activity leaves this interpretation uncertain. Here, we present new stratigraphic observations along the northern margin of the Longzhong basin that provide insight into the tectonic setting of basin development. A combination of field and subsurface observations, including the geometry of basin-bounding faults, sedimentary provenance, paleoflow direction, isopach and sedimentary facies distribution patterns, constrains basin evolution from the Middle Tertiary through Quaternary time. Our results suggest that NE-SW extension across normal faults controlled development of accommodation space in the northern Longzhong basin during the Oligocene to early Miocene. Continued sediment accumulation from the mid-Miocene through Pliocene occurred in a broad, shallow basin, consistent with thermal subsidence following extension. Basin inversion initiated between 10 Ma and 6 Ma, associated with the development of the modern Haiyuan fault system. Our results imply that the onset of Tertiary sedimentation in the Longzhong basin does not represent a developing foredeep associated with a nascent Tibetan Plateau, but rather reflects transtensional deformation inboard of extensional basins along the East Asian margin.