Based on regional geological research, by means of the kinematics parameters extracted from balanced sections and tectonic stress simulation, tectonic deformation and depositional provenances of the Huagang Period in the middle-north and east parts of the Xihu Sag are studied in this paper. The results demonstrate that the EW compression was the strongest in the Yuquan period of Miocene in the Xihu Sag, followed by the Huagang period of Oligocene. The horizontal shortening rate gradually increased from south to north during the Huagang period. There was a huge exposed basement area in the Fujiang Sag, which provided enormous sediments to the Xihu Sag. The Huagang Formation is widely distributed in the Diaoyu Islands folded-uplift belt. Its thickness gradually decreased from south to north, and the denudation thickness, recovered by the geological trend method, reached 1 700 m in the north. Up to the Huagang period, the Okinawa Trough has not yet formed.The Diaoyu Island uplift belt was thus directly next to the outer uplift of the East China Sea Shelf and received sediment supplies from the east. The numerical simulation results provided a tectonic basis for recognizing the provenances on the north and east sides of Xihu Sag. Axial drainage systems of multiple provenances dominated the Xihu Sag during the period of Huagang Formation.