Abstract: There are many reversed compressional and transform faults in the middle of the Xihu Sag. The transform faults are the ones controlling the accumulation and distribution of oil and gas. Based on 3D seismic data, gravity data, and stratigraphic thickness changes, the types and distribution patterns of faults in planes and vertical sections are studied in this paper. The sag is dominated by NE-NNE faults formed in the Pinghu stage of early Paleocene to Eocene. The faults may be roughly grouped into three fault systems: upper, middle, and lower, and the transform fault is mainly developed in the upper system. Three groups of transform faults, i.e. the Zhoushan-Guotou fault zone, the Southern Haijiao Bay fault zone, and the Northern Haijiao Bay fault zone are identified. Large transform fault zones play significant roles in trap formation and hydrocarbon accumulation. Many types of structures and trap types, such as the twisted and bifurcated “Y” shaped traps, the twisted and transformed “H” shaped traps and the twisted and reformed “Y” shaped traps are mainly developed on the background of the transform fault zone. In combination with the case analysis of oil and gas fields in the transform fault zones of Southern Haijiao Bay, it is concluded that the transform faults, as a migration channel, is of critical significance to the secondary migration of oil and gas.