The >300-km long, east striking Lapeiquan fault lies in the eastern Altyn Tagh range along the northern margin of the Tibetan Plateau and was interpreted as a north dipping thrust in early studies. However, our mapping shows that the fault is a south dipping normal fault juxtaposing Archean-Proterozoic gneisses beneath an early Paleozoic volcanic and sedimentary sequence. Its dip angle varies from <30¿ to ~60¿. The central fault segment is expressed as a 30--50 m thick ductile shear zone with well-developed mylonitic fabrics and stretching mineral lineations, where the eastern and western segments are characterized by cataclastic deformation. Kinematic indicators such as asymmetric boudinage, asymmetric folds, and minor brittle and ductile faults within the fault zone consistently indicate a top-south normal-slip sense of shear. The age of the Lapeiquan fault is constrained by two types of information. First, a sequence of Early-Middle Jurassic sediments is locally present in the hanging wall of the Lapeiquan fault. The clasts of the Jurassic strata, particularly the stromatolite-bearing, cherty limestone and purple quartzite, can be correlated uniquely with those in the footwall of the fault. We interpret that the Early-Middle Jurassic strata were deposited in an extensional basin related to motion along the Lapeiquan fault. Second, 40Ar/39Ar thermochronologic analyses indicate two prominent cooling events in the Lapeiquan footwall. The older event occurred in the latest Triassic-earliest Jurassic between ~220 and 187 Ma, while the younger event occurred in the latest Early Cretaceous at ~100 Ma. Because the 220--187 Ma cooling ages are widespread in the Lapeiquan footwall, we suggest it to represent the main stage of faulting. We interpreted the younger phase of fault motion at ~100 Ma to have been related to fault reactivation. The deformation was aided by motion along the south dipping Qiashikan normal fault that merges with the eastern Lapeiqaun fault. From the regional tectonic setting, it appears that Mesozoic extension in northern Tibet to have occurred in a back arc setting during northward subduction of the Tethyan oceanic plate. The findings of Mesozoic extensional structures in northern Tibet suggest that compressive stress induced by collision of the Qiangtang and Lhasa terranes with Asia was not transmitted beyond northern Tibet. This in turn implies that the popularly inferred contractional setting for Mesozoic evolution of the Tian Shan north of Tibet needs a reevaluation based on a combination of both structural and sedimentological observations.