Abstract: The Mesozoic-Cenozoic of the South Yellow Sea Basin has experienced multi periods of tectonic movements and transformations since Indosinian movement, and the Mesozoic-Cenozoic sags are strongly differentiated with different hydrocarbon source rocks. Based on the latest data obtained through the geological survey, the abundance, type, maturity of the organic matters from hydrocarbon source rocks were studied, focusing on analysis of hydrocarbon generating conditions of the Mesozoic-Cenozoic continental basin and the hydrocarbon source potential of seven better sags in addition to the evolutionary characteristics of the Middle Paleozoic marine hydrocarbon source rocks. Results show that the Northern Depression of the Northern Sag, the Northern and Northeast Depressions of the Northern Sag and the South-4 Depressions of the Southern Sag belong to the first-class of hydrocarbon generating depressions and the Southern(Western) Depression of the Northern Sag and the South-5 Depression of the Southern Sag belong to the seconded-class of hydrocarbon generating depressions, while the Mid-East Depression of the Northern Sag and the South-7 Depression of the Southern Sag belong to the third-class of hydrocarbon generating depressions. The marine Paleozoic under the Indosinian surface of the basin is another important source rock, whose thermal evolution degree of organic matter was more distinctly differentiated, as the low uplift zone in the Mesozoic-Cenozoic depression has the lowest thermal evolution degree, and the area around the uplift zone of the Mesozoic-Cenozoic depressions have highest thermal evolution degree, and the "basement layer" in the Mesozoic-Cenozoic depression has the thermal evolution degree between the above two.