Mechanisms driving the tectonic evolution of the southeast (SE) margin of Tibet include the Paleogene extrusion of the coherent Indochina lithospheric block and the continuous deformation caused by lower crustal flow since the middle Miocene. The timing and style of regional deformations are keys to determining the role of each mechanism. Fault‐bounded and fault‐controlled Cenozoic basins within the SE margin of Tibet record regional deformation, surface uplift, and variations in paleoclimate but often are poorly dated. New magnetostratigraphy and 40Ar/39Ar dating of volcanic ashes constrain precisely the timing of sedimentation within the Lühe Basin to between ~35 and 26.5 Ma. The basin is located in the Chuandian terrane along the Chuxiong fault, which lies ~70 km north of, and parallel to, the Ailao Shan‐Red River fault. The asymmetric syncline of the Lühe Basin suggests syncontractional sedimentation, and the basal age of the basin represents the initiation of the Chuxiong fault and crustal shortening at ~35 Ma. This is coincident with the onset of the Ailao Shan‐Red River fault and supports a kinematic link between them. Our study suggests that, like the Ailao Shan‐Red River fault, the Chuxiong fault is a Paleogene transpressional structure that developed during the extrusion and clockwise rotation of Indochina around the Eastern Himalayan Syntaxis, which caused the late Paleogene deformation and surface uplift of the Chuandian terrane and Indochina. Our revised chronostratigraphy of the Lühe Basin provides further evidence that many of the “Neogene” sedimentary basins in the SE margin of Tibet may be much older than previously thought.