Fault shape, material properties and bedding anisotropy determine the style of deformation in the hanging walls of listric normal faults. We use numerical models to study this deformation in both extension and inversion during displacement on a variety of master fault shapes. Elastic-plastic material properties in the models allow the development of shear bands, which simulate secondary faults within the hanging wall. If the master fault is composed of a planar ramp and planar flat separated by a sharp fault bend, a series of antithetic normal shear bands develops in the hanging wall, propagating up from the fault bend. Each shear band is progressively abandoned as displacement on the master fault moves it away from the fault bend. Displacements on the antithetic faults produce the limb of a hanging wall monocline and bound one side of a graben, the other side of which is bounded by the master fault. The antithetic shear bands are not rotated, and layering within the graben remains subhorizontal. On the other hand, if the fault bend is curved rather than sharp, symmetrical nested graben develop in the upper part of the hanging wall above the base of the ramp. Displacement on the master fault moves these shear bands away from the fault bend, after which they are abandoned in favor of new shear bands. Early formed synthetic shear bands become shallower and concave upward because of the folding and rotation of the hanging wall. With increasing radius of curvature of the master fault, localization into shear bands decreases and, with a large radius of curvature, shear bands do not develop. If weak bedding layers are included within the hanging wall, they become sites of bedding-parallel shear bands that accommodate flexural slip folding and replace the synthetic shear bands that develop in homogeneous models. If extension is followed by shortening and inversion, normal shear bands that developed during extension are reactivated as reverse shear bands but are also crosscut by new reverse shear bands. The models produce results that are similar to both natural structures and analogue models and provide explanations for many observations of deformation in seismic profiles through extensional terranes. ¿ 2001 American Geophysical Union