The Sanggan River is an alluvial river flowing through a graben basin system of the northern Shanxi Rift Zone, North China. During Pleistocene times, the river reach in the Datong Basin was affected successively by various external variables, such as invasion by basaltic flow, along-valley faulting and climatic change. Therefore, it provides excellent constraints for differentiating tectonically driven and climate-related fluvial incision in the context of tectonic subsidence. Based on equilibrium profile analysis, K–Ar dating of basalts (0.74–0.41 Ma), studies of the river terrace and of stream action history, we present a conceptual model for differentiating fault-driven and climate-related fluvial incision by the river. The results show that fluvial incision induced by tectonic lowering of the base-level due to along-valley movement on the Sanggan River fault is equal to fault displacement. The amount of post-basalt fluvial incision of the reach upstream from the lava dam is 23 to 25 m, of which the fault-driven and climate-related incisions are 15 m and 8 to 10 m, respectively, the former predominating over the latter. The total amount of incision in the lava dam reach is 40 to 47 m, of which the fault-driven and climate-related incisions are 10 m and 30–37 m, respectively; here the latter is predominant over the former. Since 0.41 ± 0.10 Ma, the rate of fluvial incision of the lava dam reach of the river has reached 98–115 m/Ma, which is 1.5–2 times as great as those of the reaches upstream and downstream from the lava dam. The higher rate of fluvial incision can be attributed to high water levels supplied by the onset and maintenance of backwater conditions in the reach upstream from the lava dam, due to the long period of warm and humid climate in this region. Plucking, abrasion and knickpoint migration appear to be the primary erosional processes in the lava dam reach.