This study examines the role and kinematic mechanism of vertical‐axis rotations and folding during early development phases of a transform plate boundary in continental crust. Near the Alpine Fault in New Zealand, this involved an initial period of widely distributed shear (including wrench folding), together with vertical‐axis rotations and orocline development, followed by a focusing of slip onto a single fault. In the South Island, the Haast Schist has been displaced horizontally in the Neogene by c. 480 km of dextral‐slip on the Alpine Fault. LS tectonites on either side of the fault lie on different limbs of a profound Z‐shaped orocline. Rotation of these limbs took place about a vertical axis, resulting in 25–30° of clockwise rotation of fabrics to the NW of the Alpine Fault relative to those to the south. Foliation anisotropy caused bending to take place locally by folding about an inclined hinge in the limbs of a pre‐existing synform, which tightened during the deformation. On both sides of the fault, involvement of post‐Oligocene age structures in wrench‐folding and bending suggests that the bending took place entirely in the Cenozoic, before or during Miocene development of the Alpine Fault as a through‐going structure. During this early phase of plate boundary deformation, shear was distributed across a zone >100 km wide. Vertical‐axis rotation affected, fault‐bounded basement slivers that shortened perpendicular to their strike, a style of deformation like that in the Transverse Ranges in California today.