Abstract The northern part of Sakhalin Island is an area of recent intensive tectonic movements and hydrothermal processes, as well as a place of accumulation of useful minerals. The deep structure of the lithosphere beneath the region of the Neftegorsk earthquake of May 27, 1995 in North Sakhalin, which killed residents and caused significant destruction, is examined in this paper. Our geodynamic model shows that North Sakhalin consists of the North Sakhalin Basin, Deryugin Basin and an ophiolite complex located between them. The Deryugin Basin was formed in place of an ancient deep trench after subducting the Okhotsk Sea Plate under Sakhalin in the Late Cretaceous–Paleogene. The North Sakhalin Basin was formed on the side of the back-arc basin at that time. The ophiolite complex is fixed in the position of ancient subduction zone that was active in the Late Cretaceous–Paleogene. Approximately in the Miocene, the subduction of the Okhotsk lithosphere apparently ceased. The remains of the subduction zone in the form of an ophiolite complex have been identified from geological and geophysical data. On the surface, the subduction zone is manifested as deep faults stretched along Sakhalin. It is probable that the Neftegorsk earthquake was a result of activation of this ancient subduction zone.