The crystalline crust that underlies the Western Canada Sedimentary Basin in northern Alberta is composed of tectonic domains that accreted to the margin of the Archean Rae province of western Laurentia, ca. 2.1‐1.8 Ga. Previous tectonic models in this region invoke complex plate dynamics, including oppositely verging subduction zones, to explain the assembly of various geologic domains. In this paper, we introduce a new tectonic model that invokes back‐arc extension within the Chinchaga Domain (CD). The basement crust in the CD hosts a vast, mid‐crustal reflection sequence (Winagami Reflection Sequence), previously interpreted as a mafic sill complex that intruded into an atypically wide domain of Paleoproterozoic arc magmatism. The latter has been interpreted to have formed during Paleoproterozoic tectonic assembly through near‐synchronous closure of multiple small oceanic basins and/or magmatism in a plate interior setting. Based on a reinterpretation of regional geophysical data and post‐compressional fabrics observed by re‐examination of drill cores, we propose that observed temporal relationships and present‐day configuration of Paleoproterozoic arcs is better explained by post‐assembly extension of the Chinchaga Domain. The proposed post‐assembly modification is analogous to the recent tectonic evolution of the Basin and Range and can be explained through back‐arc extension linked to slab rollback and/or a proximal coeval transform plate boundary. Our model implies a back‐arc setting for the Winagami sill complex; it also provides a tectonic framework for explaining the origin of an enigmatic low δ18O anomaly (Kimiwan anomaly) and reactivated basement faults associated with recent induced seismicity.