The devastating megathrust earthquake of December 26, 2004, occurred on the interface of the India and Burma plates and was caused by the release of stresses that develop as the India plate subducts beneath the overriding Burma plate. The India plate begins its descent into the mantle at the Sunda trench, which lies to the west of the earthquake's epicenter. The trench is the surface expression of the plate interface between the Australia and India plates, situated to the southwest of the trench, and the Burma and Sunda plates, situated to the northeast.

In the region of the earthquake, the India plate moves toward the northeast at a rate of about 6 cm/year relative to the Burma plate. This results in oblique convergence at the Sunda trench. The oblique motion is partitioned into thrust-faulting, which occurs on the plate-interface and which involves slip directed perpendicular to the trench, and strike-slip faulting, which occurs several hundred kilometers to the east of the trench and involves slip directed parallel to the trench. The December 26 earthquake occurred as the result of thrust-faulting.

Preliminary locations of larger aftershocks following the megathrust earthquake show that approximately 1200 km of the plate boundary slipped as a result of the earthquake. By comparison with other large megathrust earthquakes, the width of the fault-rupture was likely to have been more than one hundred km. From the size of the earthquake, it is likely that the average displacement on the fault plane was about fifteen meters. The sea floor overlying the thrust fault would have been uplifted by several meters as a result of the earthquake. The above estimates of fault-dimensions and displacement will be refined in the near future as the result of detailed analyses of the earthquake waves.

The world's largest recorded earthquakes have all been megathrust events, occurring where one tectonic plate subducts beneath another. These include:

the magnitude 9.5 1960 Chile earthquake, the magnitude 9.2 1964 Prince William Sound, Alaska, earthquake, the magnitude 9.1 1957 Andreanof Islands, Alaska, earthquake, and the magnitude 9.0 1952 Kamchatka earthquake. As with the recent event, megathrust earthquakes often generate large tsunamis that cause damage over a much wider area than is directly affected by ground shaking near the earthquake's rupture.