Seismicity and focal mechanism of aftershocks in Jianchuan Basin in western Yunnan Province, China, show that the basin was formed mainly by listric normal faulting parallel to the eastern edge of the basin. Similar basins in this region are generally elongated in the north-south direction and bounded by north-south normal faults and northeast-striking left-lateral strike-slip faults, or northwest-striking right-lateral strike-slip faults. An analysis of the Landsat image over this area shows that these faults divide western Yunnan into many blocks. The relative motion of the blocks is consistent with a nearly north-south compressive stress and a nearly east-west tensile stress.