The ∼400‐km‐long Litang fault system (LTFS) is a major intracontinental strike‐slip fault inside the Chuandian block, eastern Tibet, but its evolution and role in accommodating the India‐Asia convergence remain poorly known. Structural analysis shows that the LTFS splits into 5 strands as a left‐lateral, right‐stepping en‐echelon pattern formed under NW‐directed compression, subsequently reactivated by transtensive faults under NNE‐directed extension. Displaced geological and morphological markers yield a cumulative left‐lateral offset of 28.9–42.8 km. Inverse thermal‐history modeling of thermochronological data of the faulted rocks reveal accelerated cooling at 38–35 Ma, 16–13 Ma, and 7–5 Ma. The late Eocene rapid cooling is ascribed to the reactivation of the Garze‐Litang suture. Rapid cooling events at 16–13 Ma and 7–5 Ma record the onset of transpression and transtension of the LTFS, respectively, yielding a geologic slip rate of 2.6 ± 0.7 mm/yr. Both bifurcated geometry and slow slip rate of the LTFS since 16–13 Ma indicate diffuse deformation inside the Chuandian block, contrasting with strain localized on fast‐slip strike‐slip faults on the block margins. This implies a significant kinematic transition in the middle Miocene, such that the extrusion of the segmented mega‐blocks has been accommodated by both localized and distributed deformation in eastern Tibet. This tectonic transition could be explained by a change in lithospheric rheology from an earlier rigid state to a viscous state underneath the Chuandian block due to thermal weakening of the lower crust. We thus reconcile the end‐member geodynamic models of block extrusion and lower crustal flow in late Cenozoic times.