Allowing for the palinspastic restoration of Tertiary strike-slip and extensional faulting it is concluded that the Pannonian Basin is superposed on a Middle Cretaceous thrust and fold belt which is an integral part of the system of the Alps, the Carpathians and the Dinarides. An upper Cretaceous flexural basin is overlying parts of that fold belt. A Paleogene basin is seen as a retroarc flexural basin with respect to the Paleogene Carpathian arc. The transition from an overall compressional to a transitional setting in the intra-Carpathian area occurred during the Early Miocene when large-scale transcurrent movements segmented the Alpine-Carpathian arc. Major transcurrent faults can be deduced from a study of surface and subsurface geology, but the quality of the seismic data does not permit to image them adequately. The Neogene Pannonian Basin proper shows distinct modes of upper crustal extension. In the deep ($>$8 km) subbasins of the Pannonian Basin system like the Danube Basin the Middle Miocene syn-rift extension was accommodated by low-angle detachment faults overlying metamorphic core complexes. Other intra-Carpathian subbasins such as the Zagyva and Derecske troughs related to a transfer fault system and show moderate or negligible extension. The seismic reflection profiles also suggest that the Pannonian Basin of eastern Central Europe is characterized by broad Quaternary to Recent basement upwarps that may have involved compression of the crust as a whole. These features are responsible for the outcrop distribution of the pre-Neogene "basement" of the basin. They also may suggest the beginning of a large-scale basin inversion process propagating from the W.