Abstract: The formation and decomposition of gas hydrate as well as the methane leakage caused by associated biogeochemical processes may change the depositional environment of the seabed. To identify the decomposition of hydrate as well as the change in marine environment caused by the seeping methane will contribute to the understanding of the processes of hydrate formation and decomposition. In this paper, we selected the Core SH3 as a case from the Shenhu hydrate drilling area in the northern part of South China Sea to study the formation and deterioration of hydrate. Carbon and sulfur contents, main and trace elements, especially redox sensitive elements are measured. Data from pore water and previous researches are also studied. The study suggests that the sediments of the Shenhu area are mainly sourced from a fluvial origin with a little of loess and felsic igneous materials. From the data of U, Mo contents and U/Mo ratio, as well as carbon and sulfur contents, it is inferred that the layers at 10~25 mbsf in the core of SH3 is mainly formed in a reduced depositional environment, resulted from sulfate reduction by the anaerobic oxidation of methane. The change in redox condition of depositional environment may lead to the fractionation of LREE/HREE and MREE/HREE in the layers. In the SH3 core sediment, there is a sub-oxidized depositional environment at the level of about 180~215 mbsf. It is supposed to be caused by the deposition of turbidites. The depositional environment of fine-grained sediments, at the same time, also leads to the fractionation of light and heavy rare earth elements. To sum up, we have succeeded in revealing material source, environment change in the Shenhu area and the specific role of hydrate-sedimentary environment in this paper and the results are very useful for understanding of the origin of gas hydrate.