The early stage of Sichuan Basin formation was controlled by the convergence of three major Chinese continental blocks during the Indosinian orogeny that include South China, North China, and Qiangtang blocks. Although the Late Triassic Xujiahe Formation is assumed to represent the commencement of continental deposition in the Sichuan Basin, little research is available on the details of this particular stratum. Sequence stratigraphic analysis reveals that the Xujiahe Formation comprises four third-order depositional sequences. Moreover, two tectono–sedimentary evolution stages, deposition and denudation, have been identified. Typical wedge-shaped geometry revealed in a cross section of the southern Sichuan Basin normal to the Longmen Shan fold–thrust belt is displayed for the entire Xujiahe Formation. The depositional extent did not cover the Luzhou paleohigh during the LST1 to LST2 (LST, TST and HST mean lowstand, transgressive and highstand systems tracts, 1, 2, 3 and 4 represent depositional sequence 1, 2, 3 and 4), deltaic and fluvial systems fed sediments from the Longmen Shan belt, Luzhou paleohigh, Hannan dome, and Daba Shan paleohigh into a foreland basin with a centrally located lake. The forebulge of the western Sichuan foreland basin was located southeast of the Luzhou paleohigh after LST2. According to the principle of nonmarine sequence stratigraphy and the lithology of the Xujiahe Formation, four thrusting events in the Longmen Shan fold–thrust belt were distinguished, corresponding to the basal boundaries of sequences 1, 2, 3, and 4. The northern Sichuan Basin was tilted after the deposition of sequence 3, inducing intensive erosion of sequences 3 and 4, and formation of wedge-shaped deposition geometry in sequence 4 from south to north. The tilting probably resulted from small-scale subduction and exhumation of the western South China block during the South and North China block collision.