The SW Ecuador‐NW Peru forearc region is the southernmost location, where the Caribbean large igneous province (CLIP) interacted with the South American margin since the Late Cretaceous. The accretion of the CLIP to the margin led to the entrapment of the North Andean crustal Sliver, conforming the underlying basement of the forearc region in Ecuador, whereas in NW Peru, forearc depocenters involve rocks of continental affinity. Many existing tectonic reconstructions have treated these two areas independently, largely based on their crustal affinities. In contrast, this study integrates previous studies into an analysis of unpublished seismic profiles, potential field data, outcrop stratigraphy, and recent studies dealing with the dynamics of allochthonous terrane accretion along continental margins. Our integrated approach shows that SW Ecuador was dominated by a Late Cretaceous deforming outer wedge, which may have constituted a remnant of a northeast or northwest dipping obliquely obducted oceanic block at the edge of the CLIP. This tectonic phase was governed by plate instability, affecting NW Peru and SW Ecuador, followed by reestablishment of the margin by early Eocene. The resulting margin configuration and the spatial distribution of the different tectonic elements seem to have played a key role into the further Cenozoic development of the forearc region. The model presented in this study proposes that the accretion of buoyant oceanic terranes may have had a profound impact on the early margin configuration of SW Ecuador and NW Peru and led to the development of localized but genetically related forearc depocenters.