Abstract: The Gaoyou Sag is a typical half graben of the Dainan Formation which is derived from the disintegration of an unified fault depression of the Taizhou and Funing formations in the North Jiangsu and South Yellow Sea basins. There are 3 genetic types of slope belt including fault slope, erosion slope and bending slope and 2 plane patterns comprising flange and concave edge slope belts which can be classified to 10 types. Sediment sources of the Dainan Formation consist of the rocks in the Taizhou and Funing formations and the basement of the North Jiangsu Basin. The former source contains a large set of mudstones and deeply influences the depositional system of the Dainan Formation. After careful consideration of the rock facies concept, a new type of facies named mud debris flow fan was discovered. Underwater alluvial fan, mud debris flow fan, debris flow fan, fan delta, delta and braided delta are the main facies types in the Dainan Formation. The type, distribution and evolution of sedimentary system in steep slope, gentle slope and depression area of LST, TST and HST in the Dainan Formation are addressed in detail. The relationship among sediment sources, slope belts, fan system and sand body and the main controlling factors of sand distribution are determined. Sand-rich fan systems usually develop along the flange edge slope belt, and mud-rich fans lie along the concave edge.