The Xianshuihe Fault Belt (XSF), along which the syntectonic Zheduoshan batholith was emplaced, has great significance for the reconstruction of the tectonic framework in the eastern margin of the Tibetan Plateau. In this contribution, formation process and evolution of the XSF are discussed based on the structural deformation in the field and the geochronology of Zheduoshan batholith. The results show that the XSF current arc‐shaped protrusion to the north‐east probably was formed by a fracture of the clockwise rotation compression that extended northward to the periphery with the eastern Himalayan tectonic syntaxis as the centre. It is a complex fault belt formed by the superposition of multi‐stage structures. In the early‐stage formation and evolution of the XSF, the Oligocene‐Miocene migmatite zone and Miocene granites of the Zheduoshan batholith were emplaced. Among them, the lower limit of the XSF's initial activity time was not less than 47 Ma that was limited by the Zircon U–Pb geochronology of migmatite zone formed under the compression system. During the emplacement of Miocene granites, the XSF underwent a process from compression to sinistral strike‐slip, and the geochronology indicates that the onset of the XSF sinistral strike slip should not be less than 14 Ma. After syntectic magmatism, the XSF also experienced the shear deformation (from ductile to brittle) with sinistral kinematics. 40Ar‐39Argeochronology results show that the ductile shear deformation mainly occurred around 5.5–3.2 Ma and accompanied a staged and differential uplift from north to south. It extended to the south along the weak crustal zone of Anninghe, Daliangshan, Xiaojiang, and other faults, forming the Xianshuihe–Anninghe–Xiaojiang sinistral strike‐slip fault system on the eastern margin of the Tibetan Plateau, and large‐scale sinistral strike slip began around 5 Ma. Our new insights lay a foundation for understanding and dissecting the formation and evolution of the Tibetan Plateau eastern margin.