Abstract The Calama Basin, a transtensional basin situated within the Andean forearc, and its extension to the Pampa del Tamarugal (Central Depression), is filled with 700 m of sediments. Detailed sedimentary logging and 40Ar/39Ar dates from interbedded volcanic deposits have established a lithostratigraphic and chronostratigraphic framework for the upper 95 m thick Upper Miocene–Pleistocene succession. Five facies associations, fluvio-lacustrine diatomite, palustrine carbonate, massive anhydrite, fluvial and alluvial fan, have been identified within this part of the basin-fill. The following events are recognised in the basin evolution: (1) deposition of diatomaceous lacustrine sediments in two separate depocentres in the Pampa del Tamarugal and the central Calama Basin, with alluvial fan accumulation along the basin margins at 8 Ma; (2) localised deformation within the central Calama Basin between 7 and 6 Ma but continuous sedimentation elsewhere; (3) palustrine carbonate deposition across the entire area from 6 to 3 Ma except in the Pampa del Tamarugal where diatomaceous sedimentation continued until 5 Ma before being replaced by palustrine carbonate deposition; (4) widespread folding after 3 Ma and entrenchment as the drainage system cut down to reach a new base level caused by the Rio Loa breaching the Coastal Cordillera and reaching the sea. Localised lacustrine deposition in topographic lows or tectonically created dams also occurred during this period. Comparison with similar age facies elsewhere in northern Chile has shown changes such as these to be localised and diachronous, indicating that tectonic controls on accommodation space and drainage patterns are the primary influence on sedimentation in this tectonic setting. The lacustrine deposits do not appear to be a reliable recorder of low-frequency climatic change. This is exemplified by the change from lacustrine to palustrine deposition at 6–5 Ma which would appear to record a drying of the climate. However, a synchronous change from ephemeral alluvial fan deposition to more permanent fluvial deposition at the basin margins indicates increased run-off.