The southern Lhasa subterrane is the leading edge of the Tibetan Plateau and preserves important records of the Neo-Tethyan oceanic subduction and India–Asia collision. However, the early tectonic evolutionary history of the Neo-Tethyan oceanic subduction remains unclear. Here we present results from a systematic study on the early Mesozoic (Middle Triassic–Late Jurassic) magmatic and sedimentary rocks in the southern Lhasa subterrane. These rocks are distributed zonally along the southern and northern parts of the subterrane, and have been classified into the north and south belts. The magmatic rocks in the north belt show a back-arc basin affinity, with accreted bimodal volcanic sequence and sediments from central and southern Lhasa subterranes, whereas the magmatic rocks in the south belt reveal typical magmatic arc characteristics. The sediments were derived from southern Lhasa subterrane, without the input of clastic components from the central Lhasa subterrane. Based on geochronological, geochemical, and sedimentary records from both belts, we conclude that the early Mesozoic magmatism was triggered by the northward subduction of the Neo-Tethyan oceanic slab, and its initial subduction likely occurred before the Middle Triassic (ca. 240 Ma). During the Early–Middle Jurassic (ca. 193–165 Ma), a short-lived episode of back-arc extension, we attribute to roll-back of the subducting Neo-Tethyan slab, resulted in the single magmatic arc that existed during the early stages (ca. 240–194 Ma) and evolved gradually into an arc–back-arc system. The north belt represents a back-arc basin setting associated with a continental arc, whereas an intra-oceanic and continental (island) arc simultaneously developed in the south belt, and both these belts were possibly generated under the same subduction system. •The northward subduction of Neo-Tethys occurred since Middle Triassic.•The single magmatic arc evolved into an arc–back arc system at ca. 193 Ma.•Continental and oceanic arc magmatism during same subduction system.