The Dunhuang Basin, situated in western China along the Altyn Tagh Fault (ATF) zone, intersects the Tethys and Paleo‐Asian Ocean tectonic domains. Influenced by both the ATF system and the far‐field effects of the Qiangtang‐Lhasa‐Eurasia collision during the Mesozoic, the mechanism of the Jurassic sedimentary migration of the basin in response to tectonic movements is unclear so far. The paper uses a comprehensive approach, including field geological surveys, lithologic and lithofacies discern, stratigraphic relationships analysis and 2D seismic profile interpretation, to examine the distribution of Jurassic residual strata in the basin. The comprehensive results of our study suggest that the Dunhuang Basin exists as an isolated block with unique tectonic and sedimentary evolution characteristics. In the Early Jurassic, the Dunhuang Basin underwent initial rifting, leading to the formation of small segmented intermontane sags. This phase was marked by the coarse particle sedimentary system of alluvial fans and braided rivers, represented the near source rapid deposition in the initial formation period of the basin. Stratigraphic distribution was primarily influenced by pre‐Jurassic basement topography and was not significantly constrained by faulting during this period. The formation of these isolated discontinuous small intermontane sags indicates the segmented activities of the ATF in the Early Jurassic period. In the Middle Jurassic period, influenced by the ATF dextral strike‐slip faulting, sedimentation extended eastward and the depocenter migrated clockwise compared with the distribution of the Middle Jurassic strata within the Dunhuang Basin. This period witnessed the development of coal measure strata at the basin's margins and lacustrine fine‐grained clastic deposition in the centre. The segmented fracture of the ATF gradually initiated a unified dextral strike‐slip tectonic movement. In the Late Jurassic period, sedimentary strata were locally present in the Wanyao Sag but absent in other sags. The depocenter migrated counterclockwise compared with the distribution of Middle Jurassic strata within the Dunhuang Basin, due to regional uplift accompanied by the ATF sinistral strike‐slip faulting caused by the collision between the Lhasa Block and the Eurasia Plate. The depocenter migration of the Dunhuang Basin constrained within the ATF system from the Early to Middle and Late Jurassic can be attributed to the transition of the ATF strike‐slip faulting in context of the stress relaxation and compression between the collision of the Qiangtang and Lhasa blocks to the Eurasia Plate, respectively.