Large (diameter greater than ~500 km) Martian impact basins are associated with observed magnetic fields which are statistically distinct from, and smaller than, fields associated with smaller craters. We suggest that this effect arises because impacts cause shock, heating, and excavation, reducing the magnetization of previously magnetized crust. For a simple, uniformly magnetized model the magnetic field at 100 km altitude is reduced by ~50% when a crater-shaped demagnetization zone reaches the base of the magnetized layer. By analogy with terrestrial data, we assume that in Martian craters the zone of demagnetization extends to a depth of 0.04--0.15 crater diameters. On the basis of this assumption, the data suggest that the depth to the base of the magnetized layer on Mars, if uniform, is ~35 km, with lower and upper bounds of 10 and 100 km, respectively. These bounds imply magnetizations of 5--40 A m-1 and are consistent with likely Mars geotherms at 4 Gyr B.P. ¿ 2001 American Geophysical Union