Abstract: The South China Sea is one of the largest marginal seas in the western Pacific region, with its northern margin being characterized by a passive continental margin. An understanding of the geodynamic process of the formation and evolution of this marginal sea system is vital for a solution of the related scientific issues of the geology, resource and environment in this region. Here we synthesize the recent advances in researches about thermal state and rheology of lithosphere in the northern South China Sea and its formation mechanism, along with numerical modeling of extensional basin formation. Generally, heat flow of the northern margin of the South China Sea is relatively high, with an average of 75 mW/m², and is mostly derived from mantle contribution. Temperature at Moho depth is really high, and the deep geotemperature increases gradually towards the oceanic basin. The lithosphere beneath this area is associated with high temperature, low strength and intensive rheological stratification, and the lower crust is characterized by ductile flow deformation. Numerical simulation on extensional basin formation is now transitted from kinematics to dynamic modeling, focusing on the influence of the lithosphere rheology. Controversies still exist with regard to the formation mechanism of the South China Sea; the thermo-rheological evolution of the lithosphere during continental break-up is a key factor controlling the formation and evolution of the South China Sea. In the future, further studies on the dynamic evolution patterns of the thermo-rheological structure of the lithosphere are required, which is important to a better understanding of the formation of the South China Sea.