Orthogneiss and meta-rhyolite bodies from different crustal levels of the Tseel Terrane in the Mongolian Altai were examined using multidisciplinary approach involving structural geology, whole-rock geochemistry and U-Pb zircon geochronology. The orthogneisses form sheet-like bodies parallel with dominant sub-horizontal metamorphic fabric which was heterogeneously verticalized along localized zones of deformation at boundaries of lower and middle crustal domains. Three samples of orthogneisses yielded Late Devonian LA-ICP-MS U-Pb zircon ages of 373 ± 3, 377 ± 5 and 379 ± 2 Ma (2σ), which are interpreted as crystallization ages of felsic magmas. The meta-rhyolite displays poorly constrained, older U-Pb zircon ages of 380 ± 4 and 403 ± 5 Ma, which are also considered as intrusive. Whole-rock geochemistry, including relatively little fractionated REE patterns, as well as radiogenic whole-rock Nd and zircon Hf isotopic signatures point to a rather primitive source of the granitic protoliths. The high-K calc-alkaline chemistry and LILE over HFSE enrichments in the NMORB-normalized spider plots indicate an arc-related origin. Juvenile character of the studied rocks was confirmed by Nd and Hf crustal residence ages that are mostly 0.8-0.9 Ga. The origin of the metaigneous rocks is interpreted in terms of partial melting of Neoproterozoic to Cambrian magmatic arc-derived material, probably dominated by immature psammitic sediments (graywackes). This study brings important arguments that the orthogneisses do not represent an old crystalline basement previously assumed in the Mongolian Altai. A model is proposed suggesting formation of mature and layered continental crust by syn-orogenic melting of youthful volcanosedimentary wedge and emplacement of sub-horizontal syn-orogenic magmatic sheets at all crustal levels during crustal-scale vertical shortening. The vertical shortening was probably connected to lithospheric-scale extensional event associated with massive heat influx and emplacement of juvenile magmas at the bottom of the crust. It is suggested that this mechanism represents potentially a viable model for cratonization of accretionary systems worldwide.