The 2022 MW 6.6 Luding earthquake occurred on the Moxi segment of the Xianshuihe fault at the southeast margin of Tibetan Plateau, China. To assess the seismic potential of the Moxi segment, we examine the rupture process of the mainshock and aftershock sequence, along with historical seismicity. Our preferred slip model inverted from teleseismic body waves and regional GNSS static displacements shows a dominant southeastward rupture consisting of two distinct, prominent slip patches along strike extending by ∼15 km, with a peak slip of ∼2.8 m, approximately balancing the slip deficit since the last major earthquake in 1786. The northern section of the Moxi segment experienced minor coseismic slip, which, together with the significant slip deficits and positive Coulomb failure stress change induced by the 2022 mainshock indicates a high seismic potential. Several aftershock clusters are distributed along or near the Moxi segment, with strike-slip focal mechanisms around the downdip edge of the coseismic slip area at ∼8‐12 km. At the eastern flank of Mt. Gongga, another cluster of normal faulting aftershocks is located at shallower depths of ∼3‐7 km, with high seismicity rate over ∼9 months including two other M5 sequences in January and February 2023. Similar intense shallow normal faulting activity had occurred after the impoundment of the nearby Dagangshan reservoir in 2015. We speculate that some NW-SE trending normal faults were initially developed by the gravitational collapse of Mt. Gongga underneath the eastern flank, further weakened by fluid flow, as supported by the existence of hot springs and water impoundment, and reactivated by the tensional stress change induced by the 2022 mainshock. These results have important implications for assessing the seismic hazard in and around the Moxi segment, and the potential interplay between strike-slip fault and nearby mountain areas.