It was a very important transition from Precambrian to Cambrian Period, because during this time the basin nature not only had accomplished the change from rifting basin into passive margin basin, but also the most important source rocks of Paleozoic had developed in south China. So, deep studying the sedimentary sequence and depositional environment of this time is the key to recognize and understand the developing mechanism of high grade source rocks, and the dynamic setting of basin evolution. The research of sedimentary sequence and geochemistry near Sinian（Ediacaran)—Cambrian Boundary (SCB) in the Bahuang section indicate that there were double characteristic of anoxic event and hydrothermal activity, and companied with volcano activity. Based on these data and regional geological survey, authors bring out a complex sedimentary dynamic model: Crust extension—differential subsidence—hydrothermal water rising (companied with volcano)—quick transgression (companied with rising ocean current)—anoxic event. It is to say, because of crust extension, the volcano was taken place, and the siliceous rocks developed widely in shelf facies in southeast margin of Yangtze block, persisting extension increased differential subsidence, and made the platform facies farther uplifting and being eroded, and on the other hand, the siliceous rocks developed continually in slop and shelf facies. In late stage of extension, it is sea level quickly rising, accompanied with hydrothermal activity and bioradiation which aggravated the sea floor anoxia further, that resulted in more organic matter buried and preserved. Therefore, the first set regional high grade source rocks of Paleozoic was the product of extensional setting during the primary stage of passive continental margin basin from rift basin.