The late Cenozoic tectonic development of the Southeast Asian continental margin around the Banda Sea is complicated by interaction with external geological elements. Southeast Asian internal elements are the Banda Volcanic Arc and previous older arcs. External elements are the Australian continental crust and the Indian and Pacific oceanic crusts. These external elements are now trapped behind the Banda Volcanic Arc. Three main geological events are responsible for the present configuration of the Banda Sea and adjacent areas: (1) collision between the Banda Volcanic Arc and Australian continental crust;(2) emplacement of the Banda Sea oceanic crust; and (3) emplacement of microcontinents now present in and around the Banda Sea. The geology of Timor is fundamental to tectonic interpretations of the collision between the Banda Volcanic Arc and Australia. Differences exist in the tectonic interpretation of Timor and include either overthrusting, upthrusting or mélange formation. The present paper follows geological data contained in geological maps published by the Geological Survey of Indonesia in which overthrust structures are clearly shown. Paleomagnetic and paleontologic data indicate that the overthrust units were from southern paleolatitudes. Depth and magnetic lineation data support the interpretation that the Banda Sea is underlain by old oceanic crust. Similar orientation of magnetic lineations in the Banda Sea and the Argo Abyssal Plain suggests that they have the same origin. Geological data from northern Banda microcontinents, dredged samples from the Banda/Lucipara ridges and comprehensive geological development of the northern Banda Arc support the interpretation that the microcontinents were translated left-laterally westward from Irian Jaya.