New structural and sedimentary studies form the basis of a new interpretation for the Neogene Hatay Graben. Fault analysis reveals three contemporaneous trends of fault orientation (000 degrees-180 degrees, 045 degrees-225 degrees and 150 degrees-350 degrees) suggesting that the graben is transtensional in nature. Sedimentary studies show that, following shallow-marine deposition from the Late Cretaceous to the Eocene, a hiatus ensued until Early Miocene fluvial sedimentation. After a Mid-Miocene marine transgression, water depths increased until the Messinian salinity crisis, followed by a regression from the Pliocene to the present day. The basin initially developed as the distal margin of a foreland basin of the Tauride allochthon to the north, developing a classic sedimentary sequence during Mid-Late Miocene. Stresses caused by loading of the crust created a flexural forebulge to the south that supplied sediment mainly northwards. During the Plio-Quaternary, transtensional graben development took place, primarily influenced by the westward tectonic escape of Anatolia along the East Anatolia Fault Zone and left-lateral offset along the northward extension of the Dead Sea Transform Fault. This area is, thus, an excellent example of a foreland basin reactivated in a strike-slip setting. Our new two-phase model: foreland basin, then transtensional basin for the Hatay Graben, is in contrast to previous models, in which it was generally assumed that the Plio-Quaternary Hatay Graben represents a direct extension of the Dead Sea Fault Zone or the East Anatolian Fault Zone.