Controls on accretion of flysch and mélange terranes at convergent margins are poorly understood. Southern Alaska's Chugach terrane forms the outboard accretionary margin of the Wrangellia composite terrane, and consists of two major lithotectonic units, including Triassic-Cretaceous mélange of the McHugh Complex and Late Cretaceous flysch of the Valdez Group. The contact between the McHugh Complex and the Valdez Group on the Kenai Peninsula is a tectonic boundary between chaotically deformed melange of argillite, chert, greenstone, and graywacke of the McHugh Complex and a less chaotically deformed mélange of argillite and graywacke of the Valdez Group. We assign the latter to a new, informal unit of formational rank, the Iceworm mélange, and interpret it as a contractional fault zone (Chugach Bay thrust) along which the Valdez Group was emplaced beneath the McHugh Complex. The McHugh Complex had already been deformed and metamorphosed to prehnite-pumpellyite facies prior to formation of the Iceworm mélange. The Chugach Bay thrust formed between 75 and 55 Ma, as shown by Campanian-Maastrichtian depositional ages of the Valdez Group, and fault-related fabrics in the Iceworm mélange that are cut by Paleocene dikes. Motion along the Chugach Bay thrust thus followed Middle to Late Cretaceous collision (circa 90–100 Ma) of the Wrangellia composite terrane with North America. Collision related uplift and erosion of mountains in British Columbia formed a submarine fan on the Farallon plate, and we suggest that attempted subduction of this fan dramatically changed the subduction/accretion style within the Chugach accretionary wedge. We propose a model in which subduction of thinly sedimented plates concentrates shear strains in a narrow zone, generating mélanges like the McHugh in accretionary complexes. Subduction of thickly sedimented plates allows wider distribution of shear strains to accommodate plate convergence, generating a more coherent accretionary style including the fold-thrust structures that dominate the outcrop pattern in the Valdez belt. Rapid underplating and frontal accretion of the Valdez Group caused a critical taper adjustment of the accretionary wedge, including exhumation of the metamorphosed McHugh Complex, and its emplacement over the Valdez Group. The Iceworm mélange formed in a zone of focused fluid flow at the boundary between the McHugh Complex and Valdez Group during this critical taper adjustment of the wedge to these changing boundary conditions.