Seismic reflection and refraction data from the Solander Basin, southern New Zealand, show that its structural evolution has been controlled by a major fault, named here the Tauru Fault, that cuts the entire crust and splays into a diffuse zone in the upper mantle. The tectonic setting of the Solander Basin has evolved from Eocene-Oligocene extension and transtension to Miocene-Quaternary transpression and subduction. The Tauru Fault is 100 km east of the active Puysegur subduction zone thrust and is part of the overriding plate. On the basis of lower crustal reflectivity, the base of the crust beneath the adjacent Stewart Island shelf is at ~30 km depth (~9 s two-way time (TWT)), and rises to ~20 km (~8 s TWT) beneath the Solander Basin. This is consistent with gravity data. Prominent dipping reflections show that the Tauru Fault can be traced to ~30 km depth (~12 s TWT), where it merges with a zone of subhorizontal reflectors in the upper mantle. The Tauru Fault dips ~30¿ northeast and appears to offset the Moho in a reverse sense. Stratigraphic relationships show that the Tauru Fault was active as a normal fault during Eocene extension, when Solander Basin crust was thinned and ocean crust was generated farther south in the Solander Trough. It has been reactivated as a reverse fault during at least two phases of Miocene-Quaternary compression and is still active. The strike of the Tauru Fault, which is parallel to Paleozoic-Mesozoic structures and was poorly oriented for the known Eocene extension direction, strongly suggests that it formed prior to Eocene time. The Tauru Fault significantly influenced the geometry of Eocene basin formation, producing a strongly asymmetric basin dominated by east dipping normal faults, with a single eastern boundary fault. Our data demonstrate that Miocene-Quaternary simple shear associated with the Tauru Fault cuts the whole crust and continues into the upper mantle. We conclude that variations in strength of the lithosphere, particularly associated with inherited structures in the crust and upper mantle, may control many aspects of basin development, passive margin formation, and the kinematics of continental deformation zones. ¿ 2000 American Geophysical Union