Oblique plate convergence between Indian Ocean lithosphere and continental crust of the Sunda plate is distributed between subduction on the Sunda megathrust and upper plate strike-slip faulting on the Sumatran Fault Zone, in a classic example of slip partitioning. Over the last decade, a destructive series of great earthquakes has brought renewed attention to the mechanical properties of these faults and the intervening fore-arc crustal block. While observations of fore-arc deformation over the earthquake cycle indicate that the fore-arc crust is fundamentally elastic, the spatial pattern of slip vector azimuths for earthquakes sourced by rupture of the Sunda megathrust is strongly inconsistent with relative motion of two rigid plates. Permanent and distributed deformation therefore occurs in either the downgoing lithospheric slab or the overriding fore-arc crust. Previous studies have inferred from geodetic velocities and geological slip rates of the Sumatran Fault that the fore-arc crust is undergoing rapid trench-parallel stretching. Using new geological slip rates for the Sumatran Fault and an updated decadal GPS velocity field of Sumatra and the fore-arc islands, we instead show that permanent deformation within the fore-arc sliver is minor and that the Sumatran Fault is a plate boundary strike-slip fault. The kinematic data are best explained by diffuse deformation within the oceanic lithosphere of the Wharton Basin, which accommodates convergence between the Indian and Australian plates and has recently produced several large earthquakes well offshore of Sumatra. The slip partitioning system in Sumatra is fundamentally linked with the mechanical properties of the subducting oceanic lithosphere.