The formation of deformation bands can significantly modify the strength and transport properties of porous sedimentary rocks. Among the different types of deformation bands, compaction bands exhibit porosity reduction with little to no shear displacement. Natural compaction bands have previously been reported and studied in only a few areas. They often coexist with faults and other localized deformation structures. We mapped the geometrical relation between compaction bands, shear bands and faults in Lower Cretaceous porous sandstone at Makhtesh Katan, Israel. To understand the effect of pre-existing faults on the formation of compaction bands, we conducted deformation experiments on pre-faulted Bentheim sandstones. These experiments produced compaction bands consistently intersect the pre-existing fault. To gain better mechanical understanding of the observed band geometry, we also carried out three-dimensional (3D) numerical simulations with the input elastic moduli and yield strength well-constrained from the deformation experiments. We demonstrated that the formation of deformation bands is dictated by stress concentrations associated with the pre-existing fault. Frictional slip along the heterogeneous fault plane can produce a local stress concentration that would be responsible for further localized damage and the development of deformation zones. When fault slip is restricted (a possible result of high confinement), compaction bands initiate at high stress concentration sites resulting from geometrical irregularities of the fault. Finally, using a plane-strain two-dimensional (2D) linear-elastic model with the geometry of the faults mapped in the outcrop, we were able to provide a mechanical explanation of the distribution for deformation bands observed at the Makhtesh Katan study area.