A 300 km-long linear aeromagnetic anomaly associated with the Karari Fault Zone defines a subvertical, Early Proterozoic, intracratonic shear zone within the Gawler Craton. The shear zone contains various mylonites and separates quartz + sapphirine-bearing granulites to the northwest from upper amphibolite facies gneisses to the southeast. The aeromagnetic anomaly is produced by magnetite-rich metasediments (iron formation), semi-pelitic gneisses and thin pegmaties which have become interlayered on all scales during deformation. All have undergone intense non-coaxial strain with development of both Type I and Type II S-C proto- to ultra-mylonite fabrics. Kinematic indicators, including asymmetrical megacryst tails, elongation lineations, vergence relationships of S-C foliations, and mica ‘fish’ indicate downthrow of the northwestern block with a sinistral strike-slip component. The shear zone represents a major zone of crustal weakness which has remained intermittently active until the Tertiary. Earlier, perhaps Archaean, upthrusting of the northwestern block is suggested.