Abstract: The Subei – South Yellow Sea Basin is a significant Mesozoic-Cenozoic hydrocarbon-bearing basin in East China, yet its offshore areas remain underexplored, and the local petroleum geology and unconventional resource potential remain poorly understood. We studied the Paleogene Taizhou and Funing formations based on onshore and adjacent wells in stratigraphy, sedimentology, and petroleum geology with gravity, aeromagnetic, and seismic interpretations; systematically analyzed the stratigraphic boundaries, depositional architecture, and tectonic framework of the formations; and evaluated the shale quality and shale oil potential. Results indicate that the study area belongs to the northern, central, and southwestern sub-sags of the Nan’er Sag, where the Paleogene strata are strongly controlled by NEE-SWW and NNE-SSW fault systems, showing significant difference in subsidence. The Taizhou Formation, with a thickness exceeding 700 m, is dominated by lacustrine shore-shallow to semi-deep lake facies, and its second member contains widely distributed organic-rich shales. The Funing Formation distributes widely, with a thickness up to 2000 m. Dark shales in the Members 2 and 4 of Funing Formation are extensively developed, which are characterized by semi-deep to deep lacustrine facies, low sandstone content, and favorable source rock conditions. Geochemical analyses revealed that shales of the Taizhou and Funing formations generally have TOC values of 1%～2%, with I–II type kerogen, and the Ro values in deep-sag samples have reached the oil-generation threshold. By analogy with successful shale oil exploration in the Baiju Sag, the Nan’er central sub-sag (the Yancheng East offshore area) was identified as the most favorable shale oil target. In contrast, the second member of Funing Formation in the southwestern sub-sag (the offshore area east of Hai’an) and the fourth member of it in the central sub-sag (the offshore area east of Yancheng) may serve as secondary prospects. This study provided a geological basis for evaluating and exploring unconventional hydrocarbon resources in the offshore South Yellow Sea basin.