The Panama Basin includes portions of the Nazca, Cocos and South America lithospheric plates and borders the Caribbean plate. The complex interactions of these units have largely determined the topography, pattern of faulting, sediment distribution, and magnetic character of the basin. Only heat flow data fail to correlate with major structural features related to these units.
The topographic basin appears to have been created by rifting of an ancestral Carnegie Ridge. The occurrence of a distinctive smooth acoustic basement and a characteristic overlying evenly stratified sedimentary sequence on virtually all elevated blocks in the basin suggest that they all once formed part of this ancestral ridge. The present Carnegie Ridge is the relatively undeformed southern half of this feature, while the Cocos Ridge is the northern half fragmented by left-lateral north-south transcurrent faulting. As blocks of the Cocos Ridge reach the Middle America Trench, they appear to clog the subduction zone and become welded to the Nazca plate. Thus, the active transform fault at the eastern edge of the Cocos plate has episodically shifted west as segments of the trench were deactivated. Such a shift appears to be occurring at the present time.