The Chenghai fault zone, an important part of the Dali fault system, is instrumental in comprehending the crustal deformation of the southeastern margin of the Tibetan Plateau. Detailed remote sensing interpretation and field mapping are used to study the geometry and kinematic characteristics of this fault. The results show that the Chenghai fault zone extends up to 200 km from Jinguan to the south end of the Midu basin, and it truncated and inherited the trace of the Red River fault on the east side of the Midu basin. Furthermore, it is an oblique-slip fault with both normal and sinistral strike-slip component, and the normal component is more significant. The transtensional activity of this fault may have started in the Early Pliocene (5–6 Ma). The average maximum dip-slip rate can be 0.37–0.57 mm/yr, and the maximum left-slip rate is 0.83–1.20 mm/yr. The clockwise rotation of the Dali block resulted in the Z-shaped Dali fault system and the Chenghai fault zone. Moreover, the difference of angular velocity between the inner and the outer arcuate belts divided by the Litang–Dali–Ruili fault system leads to the clockwise rotation of the Dali block.