Few studies have been conducted on the activity of the Mengzi fault system, which is located to the southeast of the Sichuan-Yunnan block. The Mengzi fault is distributed along the eastern margin of the Mengzi basin. However, little is known about the location, length, and activity of the fault or the occurrence of paleo-earthquakes during the late Quaternary. This paper studies the geometric distribution and activity of the fault via remote sensing imagery interpretation, fault outcrops in the area, faulted landforms and chronological analyses. The results show that the Mengzi fault extends from Nandong (Kaiyuan basin) in the north through the eastern margin of the Mengzi basin to Pingbian in the southeast, eventually intersecting with the Honghe fault. The Mengzi fault is approximately 250 km long and is characterized as a reverse strike-slip fault. We survey and calculate the offset gullies and terraces dislocated by the fault; combined with sample dating, we calculate the horizontal slip rate of the fault since 30 ka BP to be 0.91–1.56 mm/a. Three paleo-events since 30–40 ka BP are observed with a 10-ka major earthquake recurrence period. We analyze the relationships among the Mengzi fault, southern Xiaojiang fault, and Qujiang-Jianshui fault and note a slip rate loss of ≥8 mm/a from the southern Xiaojiang fault that was absorbed by reverse dextral strike-slip faulting and lateral shortening of the Qujiang-Jianshui fault and the Mengzi fault. The Mengzi fault plays an important role in the adjustment of the large slip rate reduction along the southern Xiaojiang fault. Moreover, the Mengzi fault has a similar tectonic position to the seismogenic faults of the 2008 Wenchuan earthquake, 2013 Lushan earthquake and 2014 Ludian earthquake, and the Mengzi fault and southern Xiaojiang fault both accumulate the energy generated by the southeastward movement of the Sichuan-Yunnan block. Studies on the Mengzi fault are helpful for renewing our understanding of the tectonic patterns of the southeastern Sichuan-Yunnan block and delimiting the boundary of the southeastern block margin. Furthermore, because the cities of Mengzi and Kaiyuan are located along the Mengzi fault, this study has practical significance for earthquake disaster mitigation.