The middle Eocene Domengine Formation crops out in the Coast Ranges along the structurally complex western margin of the basin and forms an economically important gas reservoir in the Sacramento basin, California. Previous studies had interpreted the Domengine Formation as a conformable succession of barrier-island sandstone with tidal channels and coastal-plain deposits or a delta, tidal shelf, marsh complex located along a north–south-trending shoreline bordering the shelf. Integration of outcrop and subsurface data, however, indicate that the Domengine Formation can be regionally subdivided into two sequences. The bases of each sequence consist of fluvial and estuarine sandstones that were deposited in northeast–southwest-trending incised-valley systems that are interpreted to have been formed by fluvial incision. Shelfal shales and shoreline sandstones overlie the incised-valley fills and reflect flooding of the shelf. This cyclicity is interpreted to have been produced by the interplay of tectonism and eustasy. Tectonism is interpreted to have controlled the location of the incised submarine canyons and the fluvial estuarine systems throughout the early Tertiary as they stack vertically and trend southwest toward the structurally controlled depocenter. Eustasy appeared to have controlled the timing of the transgressive–regressive depositional cyclicity present in the lower Tertiary succession due to the strong correlation of available biostratigraphic data constraining the timing of these major periods of incision to the global coastal-onlap curves. Thickness trends observed in the Domengine Formation are interpreted as a product of variable incision, and not the result of depositional thinning in a northwesterly direction suggested by the previous models. The importance of this reinterpretation of the Domengine Formation, within a sequence stratigraphic framework, is that it provides a predictive model for both understanding the thickness trends and facies distributions of the Domengine Formation. It also potentially provides a more accurate depositional model for exploration and development of this important hydrocarbon reservoir.