The southern Indus basin (550 × 250 km) is characterized by tectonic upwarping on the western margin of the Indo-Pakistan subcontinent. Several hypotheses have so far been proposed to explain the origin of these crustal features, but these basement upwarps remain puzzling. Aeromagnetic data have been analyzed and interpreted, supplemented with seismicity and geological information. From the integrated study, we inferred basement configuration and developed models for tectonic evolution of these exotic crustal features and their impact on hydrocarbon potential associated with the southern Indus basin. The southern Indus basin is identified as an extension basin resulting from an inferred fossil-rift crustal feature overlain by a thick sedimentary sequence. Extension was a consequence of temporal divergence of the Indo-Pakistan subcontinent from Gondwanaland during the early Paleozoic. Based on magnetic-anomaly trends, the Indus basin fossil-rift feature is characterized by horst and graben structures, together with a system of transcurrent faults. The association of seismicity events and basement crustal features suggests that Tertiary reactivation of individual segments of the inferred rift structure has deformed overlying sequences of the Indus basin and also the surrounding areas, particularly the fold and thrust belt of Pakistan on the western side of the basin. The proposed geological models also illustrate the potential for appropriate environments for development of hydrocarbon source rocks, sufficient heat for thermal maturity, and structures for reservoirs and seals, suggesting more bright prospects in the southern Indus basin.