Abstract: The Xihu Depression is the most important potential oil and gas exploration areas in the Donghai Basin. The Huagang Formation, as the major reservoir rock comprised of lacustrine sandstone and mudstone, is very thick. The Formation could be further divided into 2 members. Based on the data of logs, cores, seismic profiles and paleontology, and compared with the basins on mainland, careful studies are devoted to the sedimentary system and sedimentary facies of the Huagang Formation in the Xihu Depression. There are three kinds of depositional systems, i.e. lacustrine, deltaic and fluvial systems. And the Xihu Depression was a large lake during the Huagang stage. Shallow water delta was formed under the control of paleotopography, paleoclimate, lake level, water depth and paleo-provenance, and characterized by underwater distributary channel complex in the delta front. Sediments are provided by the provenance along the central overturned structure zone. The large delta in the lake basin formed the high-quality reservoir in the Xihu Depression. The middle and north parts of the central overturned structure zone is supposed the main exploration target in the future.