As illustrated to the right, tholins are thought to form in nature through a chain of chemical reactions known as pyrolysis and radiolysis. This begins with the dissociation and ionization of molecular nitrogen () and methane () by energetic particles and solar radiation. This is followed by the formation of ethylene, ethane, acetylene, hydrogen cyanide, and other small simple molecules and small positive ions. Further reactions form benzene and other organic molecules, and their polymerization leads to the formation of an aerosol of heavier molecules, which then condense and precipitate on the planetary surface below.
Tholins formed at low pressure tend to contain nitrogen atoms in the interior of their molecules, while tholins formed at high pressure are more likely to have nitrogen atoms located in terminal positions.
Tholins may be a major constituent of the interstellar medium. On Titan, their chemistry is initiated at high altitudes and participates in the formation of solid organic particles. 
These atmospherically-derived substances are distinct from ice tholin II, which are formed instead by irradiation (radiolysis) of clathrates of water and organic compounds such as methane () or ethane (). The radiation-induced synthesis on ice are non-dependant on temperature.
Models show that even when far from UV radiation of a star, cosmic ray doses may be fully sufficient to convert carbon-containing ice grains entirely to complex organics in less than the lifetime of the typical interstellar cloud.