Neoproterozoic (Upper Riphean-lowermost Vendian) deposits of an extensional peripheral basin in the Tanafjorden-Varangerfjorden Region of eastern Finnmark, northern Norway, have been analysed with respect to the basin development and signatures of tectonic controls on sedimentation. Correlation of the Veinesbotn Formation southwest of Varangerfjorden with the Riphean succession (the Vadsø and Tanafjorden groups) to the north indicates a much younger relative age of the former than previously assumed and hence implies the presence of a major fault zone hidden beneath Varangerfjorden. This Varangerfjorden Fault Zone (VFZ) had probably two phases of extensional fault activity. The first phase (middle Late Riphean) is inferred from the evidence of syntectonic sedimentation in the Vadsø Group and the lowermost formation of the Tanafjorden Group, which suggests a syn-rift phase and possible activity of a basin-margin normal fault. The remainder of the Tanafjorden Group, including the Veinesbotn Formation, indicates post-rift thermal-sag phase, when coastal onlap of the basin margin occurred due to a relative sea-level rise. The second phase (terminal Riphean) is inferred from the revised stratigraphic correlation that implies a major reactivation of the VFZ. The fault involved was probably normal and dipping steeply to the south, opposite to the dip direction of the basin margin fault in the first phase. This suggests reactivation and rotation of the basin margin fault, or reactivation of a south-dipping intrabasinal fault. Fault-block rotation and footwall erosion were probably responsible for the major low-angle unconformity between the Riphean and Vendian successions. In addition, the topography created by the VFZ probably controlled the location and orientation of the Varangerfjorden palaeovalley that accommodated the oldest (earliest Vendian) part of the glacigenic deposits in the Vestertana Group. The tectono-stratigraphic model should further be evaluated on the basis of seismic profiles across the inner Varangerfjorden.