Kame terraces are formed at the ice margin in alpine environments, near the lateral moraines. There are similar to kames in that they are made of stratified sand and gravel deposits. However, their formation differs from kames due to the fact that kames form in the supraglacial/subglacial environment, whereas kame terraces are a marginal feature.

Kame terraces form when an outwash stream or lake is trapped between the ice and the confines of the mountain valley. This creates a place for deposition to take place, and a large sediment deposit accumulates. When the ice melts, the terrace is left: