The Changxing Formation reef in the Sichuan Basin is a representative of the reef reservoirs in China and the world. It has been suggested that the platform margins are favorable for the reef development mainly based on case studies in the northeastern Sichuan Basin. In this paper, writers carried out a relatively comprehensive analysis by viewing the whole basin, with emphasis on the influence and controlling of basement faults on the reef distribution and development. It is indicated that abundant deep and large NE and NWtrending basement faults were developed during the Late Permian Changxing period. The activity of the faults is supported by stratigraphic, lithofacies and tectonic evidences. As a consequence, a depositional framework characterized by alternative uplifts and depressions was formed, and in turn decided the occurrence and developing scale of the reefs. Being controlled by the hangingwall block of the normal faults, the reefs dominantly occurred in the fault step areas of the paleo hanging wall, e.g., the platform margin areas surrounding the marine trough and the fault highs inside the platform. Therefore, the reefs can develop adjacent to the basement faults inside the platform, besides the platform margins as previously suggested. This can be favorable and key targets for further hydrocarbon exploration. This new understanding can help to broaden the regional petroleum exploration strategy, and can provide new information for theoretical study of the reef hydrocarbon accumulation.