Abstract: The Panyu 4, a sag in the Zhu Ⅰ Depression with relatively high degree of exploration, is formed by episodic rifting and reformed by later stage magmatism. The distribution pattern of source rocks in the sag is the key issue to current oil and gas exploration. The latest seismic interpretation, together with the comprehensive research of core data, logging data, geochemical data, suggests that the Wenchang Formation in the Panyu 4 sag has a typical two-layer structure. After intensive rifting in the Stage a of the Rifting Episode I, the uplifting and magmatism in the north of the sag caused the shrinkage of the sag N, the expansion of the sag S and the formation of sag NW. The general strike of the Panyu 4 sag changed form NE-SW to NEE- SSW. In the second Rifting Episode, the Zhu-Qiong movement gave rise to the regional uplifting followed by denudation. In the Rifting Episode I, semi-deep lake deposits gradually turned to deep lacustrine facies from bottom to top following the NE-SW direction. The Lower Wenchang Formation has relatively smaller distribution area for semi-deep and deep lacustrine deposits which is the major source rocks currently in exploration. The Upper Wenchang Formation has larger area in terms of source rock distribution. However, thick source rocks only distributed in the south, where is rich in organic matter and lack of magmatism. Although the lower Wenchang Formation was denuded in the north by the end of the Stage a of the Rifting Episode I, the source rock in the north is thicker than that in the south. The magmatism may enhance the maturity of organic matter and promote the hydrocarbon generation in the Lower Wenchang Formation. The semi-deep and deep lacustrine facies source rocks in the Upper and Lower Wenchang Formations are rather different and the hydrocarbon-generating intensity in the Lower Wenchang Formation is higher than that in the Upper.