This paper has been written firstly to dispel a widely held notion that the structure and stratigraphy of Permian and Triassic sedimentary rocks of the southern Sydney Basin precludes post‐Permian tectonic lowering of the coastal zone of southeast New South Wales with respect to the highlands; and secondly to present evidence of Cenozoic tectonic lowering of the coastal zone by gentle tilting and, locally, by faulting. The apparent horizontal attitude of Triassic sandstone in an east–west section inland from Nowra precludes later faulting or steep monoclinal folding in this immediate area, but does not preclude geomorphically significant tilting or gentle warping; and it places no constraints on the tectonic and geomorphic history in areas south of the sandstone outcrop. The form of an Oligocene erosion surface around Ulladulla, and the distribution of older rock units below this surface are also not incompatible with significant Cenozoic tectonism. Near Ulladulla, Mogo, Moruya, and Merimbula, mid‐Cenozoic non‐marine sediments and basalts in north–south‐trending palaeovalleys dip gently seaward at angles around 1°—about the same as the eastward slope of the offshore seismic basement and also similar to the average slope between the coastal zone and inland plateaux; indicating that the coastal zone and continental shelf have been downwarped relative to the inland plateaux in these areas. The area between Brooman, on the Clyde River, and the coast between Termeil and Bateman’s Bay, has been lowered by Cenozoic faulting. The steep slope on the west side of the Clyde River is a dissected 200–300 m fault scarp, and there are two other east‐facing fault scarps between the Clyde River and the coast. Fault blocks between the Clyde River and the coast are gently backtilted to the west. Further south, there may be more faults and tilt blocks between Bateman’s Bay and Moruya. Tectonic lowering of the coastal zone and continental shelf appears to be mostly post‐mid‐Cenozoic. This suggests that marine shelf sediments are likely to be not older than Miocene. There could also be older Cenozoic non‐marine sediments and perhaps basalts in palaeovalleys at the base of the section.