The Late Triassic–Early Jurassic tectonic setting that produced arc magmatism in the southern Gangdese region and the timing of the initial Yarlung Zangbo Ocean subduction remain controversial. Arc-related basin records can provide sedimentological constraints on these controversial events. In this study, the sedimentary tectonic setting of the Liuqiong Formation and the tectonic evolution of the Yarlung Zangbo Ocean in the southern Gangdese were investigated using detrital zircon U–Pb chronology and Hf isotope data. The Liuqiong Formation mainly comprises intercalated clastic and volcanic rocks, locally developed limestone blocks, and is characterized by deepwater gravity flow deposits. The detrital zircon U–Pb ages were concentrated at 202–249 Ma, with highly positive ε_Hf(t) values (+10.3–+14.4). Provenance analyses indicate that the sedimentary detritus in the Liuqiong Formation was sourced from Late Triassic–Early Jurassic arc magmatic rocks in the southern Gangdese region. Based on comprehensive investigations of the regional geology, the Late Triassic–Early Jurassic Liuqiong Formation was deposited in a forearc basin setting, and contains a basin record of the northward subduction and southward accretion of the Yarlung Zangbo Ocean.