The Junggar Basin is located on the southwestern margin of the Central Asian Orogenic Belt (CAOB). Whether the Late Permian‐Early Triassic tectonic inversion there recorded the final closure of the North Tianshan Ocean or post‐accretionary intracontinental deformation remains controversial. Linking the structural style and provenance analysis of the western and northern margins of the Junggar Basin can provide a better understanding of this tectonic event and its geodynamic mechanisms. Seismic reflection profiles show that Early Permian syn‐rift half‐grabens were followed by the Middle Permian thermal sag, which is characterized by regional onlap and the migration of the depocentre to the centre of the basin. Together with the published isopach and palaeogeography maps in the western margin of the Junggar Basin, the seismic profiles demonstrate that the reactivation of the Ke‐Bai and Wu‐Xia dextral transpressive fault zones between the West Junggar terrane and the Mahu sag controlled the tilting and deformation of pre‐Permian strata and the distribution of Late Permian‐Early Triassic fan deltas. The reported igneous and sedimentological evidence indicates that the southern margin of the Junggar Basin was a rift basin controlled by transtensional strike‐slip faults in the Early Permian, and also was followed by a Middle Permian thermal sag. Quantitative provenance analysis using detrital zircon geochronology and the DZmix program shows that the West Junggar terrane and Tianshan orogenic belts experienced varied uplift, indicative of a transition from the Middle Permian thermal sag peneplanation to the Late Permian‐Early Triassic tectonic inversion involving reactivation of Early Permian normal faults. This intracontinental deformation event in the Junggar Basin was taken up by block counterclockwise rotation during the final amalgamation of the Pangea, which may be the long‐range effect of the final closure of Paleo‐Asia Ocean in the eastern part of the CAOB.