Abstract: The Lower Yangtze block and the Cathaysian block drifted towards the north during Early Cambrian and then the paleo-continent of South China(OCSC) formed. The Northern Yangtze block (or the Lower Yangtze area), however, remained unaffected as a shallow marine carbonate platform. It was rich in organic matter in Early Cambrian due to some factors, such as the prevailing upwelling current. As the result, a set of hydrocarbon source rocks was formed in an anoxic marine environment. There were two Early Cambrian depocenters for hydrocarbon source rocks in the region along the north-east direction, one in Anji-Xiuning deep-water shelf area, where the source rocks were about 100~300 m in thickness; and another one in Taizhou-Yancheng deep-water shelf area, with a thickness within 50~150 m. Transgression was in NE direction together with the thinning out of the source rocks. It was estimated that the source rocks were around 50-200m in thickness in the South Yellow Sea. Most of the Paleozoic oil reservoir had been probably damaged when OCSC collided with the North China paleo-land in Mesozoic. The Auxi Formation was deposited in the slope area around the platform, which were favorable for hydrocarbon generation, but the oil and gas reservoirs were destroyed in Mesozoic. The South Yellow Sea was then deposited with shallow marine carbonate facies, which were not good enough for hydrocarbon generation, but survived from the collision. It could make contribution to the formation of reservoirs in later stage. We speculated that the Lower Cambrian hydrocarbon source rocks in the South yellow sea, which were shallowly buried during the continental margin stage to the collision stage, could experience the second hydrocarbon-generation in the middle-late Yan Shan movement, and very likely formed a substantial oil and gas reservoirs.