Shallow (<25 km), diffuse crustal seismicity occurs in a zone up to 150 km wide adjacent to the southern Alpine Fault, New Zealand, as a consequence of distributed shear and thickening in the obliquely convergent Australian‐Pacific plate boundary zone. It has recently been proposed that continental convergence here is accommodated by oblique slip on a low‐angle detachment that underlies the region, and as such, forms a previously unrecognized mode of oblique continental convergence. We test this model using microseismicity, presenting a new, 15 month high‐resolution microearthquake catalog for the Southern Lakes and northern Fiordland regions adjacent to the Alpine Fault. We determine the spatial distribution, moment release, and style of microearthquakes and show that seismicity in the continental lithosphere is predominantly shallower than ~20 km, in a zone up to 150 km wide, but less frequent deeper microseismicity extending into the mantle, at depths of up to 100 km is also observed. The geometry of the subducted oceanic Australian plate is well imaged, with a well‐defined Benioff zone to depths of ~150 km. In detail, the depth of continental microseismicity shows considerable variation, with no clear link with major active surface faults, but rather represents diffuse cracking in response to the ambient stress release. The moment release rate is ~0.1% of that required to accommodate relative plate convergence, and the azimuth of the principal horizontal axis of contraction accommodated by microseismicity is 120°, 15–20° clockwise of the horizontal axis of contractional strain rate observed geodetically. Thus, short‐term microseismicity, independent of knowledge of intermittent large‐magnitude earthquakes, may not be a good guide to the rate and orientation of long‐term deformation but is an indicator of the instantaneous state of stress and potential distribution of finite deformation. We show that both the horizontal and vertical spatial distribution of microseismicity can be explained in terms of a low‐angle detachment model.