The Lake Tahoe Basin was formed by vertical motion faulting. Uplifted blocks created the Carson Range on the east and the main Sierra Nevada crest on the west. Down-dropping and block tilting created the Lake Tahoe Basin in between.This kind of faulting is characteristic of the geology of the adjoining Great Basin to the east.
Lake Tahoe is the youngest of several extensional basins of the Walker Lane deformation zone that accommodates nearly 0.47 in (12 mm) per year of dextral shear between the Sierra Nevada-Great Valley Block and North America.
Three principal faults form the Lake Tahoe basin: the West Tahoe Fault, aligned between Meyers and Tahoe City, and which is the local segment of the Sierra Nevada Fault, extending on shore north and south of these localities; the Stateline/North Tahoe Fault, starting in the middle of the lake and creating the relief that forms Stateline, NV; and the Incline Village Fault, which runs parallel to the Stateline/North Tahoe Fault offshore and into Incline Village. The West Tahoe Fault appears to be the most active and potentially hazardous fault in the basin. A study in Fallen Leaf Lake, just south of Lake Tahoe, used seafloor mapping techniques to image evidence for paleoearthquakes on the West Tahoe and revealed the last earthquake occurred between 4,100 and 4,500 years ago. Subsequent studies revealed submarine landslides in Fallen Leaf Lake and Lake Tahoe that are thought to have been triggered by earthquakes on the West Tahoe fault and the timing of these events suggests a recurrence interval of 3,000–4,000 years.
The Sierra Nevada adjacent to Lake Tahoe were carved by scouring glaciers during the Ice Ages, which began a million or more years ago, and retreated ~15,000 years ago at the end of the Pleistocene. The glaciers carved canyons that are today iconic landmarks such as Emerald Bay, Cascade Lake, and Fallen Leaf Lake, among others. Lake Tahoe itself never held glaciers, but instead water is retained by damming Miocene volcanic deposits.