Neoproterozoic igneous rocks in the Panxi region from the western margin of the Yangtze block, South China craton, record major changes in tectonic evolution and crustal thickness, and provide important constraints on the paleogeographic position and climate changes of the block in Rodinia and Gondwana reconstructions. Our new dating results show that the Pengguan complex from the Panxi region comprises ca. 743 Ma adakitic granodiorites and ca. 741 Ma A-type granites. The former is plagioclase-rich and has relatively low SiO2 content (65.22−67.36 wt%), high Mg# values (44.40−52.33), Sr/Y (23.22−61.94) and (La/Yb)N ratios (normalized to chondritic values; 13.41−24.00), with positive whole-rock εNd(t) values (+1.17 to +5.15), and high zircon εHf(t) (+5.53 to +8.83) and low zircon δ18O (4.21‰ to 5.51‰) values, indicating derivation from the partial melting of thickened juvenile mafic lower crust. By contrast, the granites are rich in K-feldspar and have high SiO2 contents (78.71−84.62 wt%), 10,000 × Ga/Al ratios (>2.6), and Fe/Mg ratios, with negative εNd(t) values (−1.47 to −0.02), high zircon εHf(t) (+2.94 to +9.77), and high saturation temperatures (828−920 °C). These features indicate fractional crystallization and partial melting of continental crust in a low-pressure, high-temperature, extensional environment. Integrated with the zircon Eu anomalies (Eu/Eu*) data and Hf-O isotopic data on pre-740 Ma magmatism in the Panxi region, we find that a rapid increase of crustal thickening (820−740 Ma) was synchronous with a gradual decrease of zircon δ18O and an increase of zircon εHf(t) values. These variations indicate an increase in the degree of hybridization between mantle sources and subducting slab-derived materials, thus generating a great number of low-δ18O melts, and continuous crustal thickening through the underplating of juvenile magmas. In addition, thinning of the crust since ca. 740 Ma, along with the gradual increase in zircon δ18O and εHf(t), suggests a shift from regional compression to extension. This documented shift, together with regional data from along the western margin of the Yangtze block, indicates a change from the well-developed and long-established Panxi convergent plate margin arc system (at least ca. 870−750 Ma) to passive-margin development and Cryogenian (720−635 Ma) glaciation. The long-lived subduction zone requires a peripheral location of South China that was linked to northern India during the Rodinia breakup. The subsequent and contemporaneous passive-margin development of the Yangtze block and India, along with the similar tectonic affinities of the Cathaysia block with India, indicate that South China lay outboard of the northern Gondwana margin during the assembly of this supercontinent.