Abstract: Guoxi Sub-sag, a key tectonic element on the northern Baochu Slope of Xihu Sag, is adjacent to the hydrocarbon-rich Santan Depocenter. Multi-phase faulting has dissected the area into a complex fault-block system, but the current insufficient understanding of the fault system constrains further hydrocarbon exploration. To clarify the mechanisms of fault development and their effects on facies control and reservoir formation, well data is integrated with 3-D seismic volumes. First, the characteristics of the fault activity were identified, then the evolutionary sequence of the main sag-controlling faults was analysed. Ultimately faulting mechanisms such as differential subsidence controlling facies and fault-sand coupling controlling reservoir formation were revealed.The results indicate that a stepped fault system was developed in Guoxi Sub-sag. The main sag-controlling faults initiated during the Paleocene when the basin was formed and ceased activity by the end of the Eocene. Within the restricted embayment enviroment of Baoshi and Pinghu formations, tidal-channel sands and tidal-delta sands literally "initiated and persisted along faults". Fault activity controlled the formation of structural traps such as faulted anticlines and fault blocks. The sag-controlling faults dominated vertical hydrocarbon migration, and coupled with sand bodies, forming efficient migration networks and local sealing conditions. The findings provide a technical basis for next stage of exploration in the study area.