Abstract: By reviewing comprehensive geological data from Sichuan basin and adjacent areasopre-basining construction and main factors affecting them are studied. In the light of opening and closing of the ancient Tethys in China, the mechanism of formation and transformation of the basin is discussed and four relavant stages are identified as follows. 1) Stage of formation of the basement (pre-Sinian), when the basement was consolodated and turned into continental crust through pre-Sibao orogeny (1.700m.y. -1.900m.y.),Sibao orogeny (1.400m.y.) and Jinning movement (800m.y.). 2) Stage of uplifting of Chuanzhong-Kangdian-Yajiang crustal rise (pre-Permian) which, according to depositional characteristics, thicknesses, bio-assemblages and tectonic features of strata from Sinian to Carboniferous, is believed to be the westerly extention of Upper Yangtze plateform. 3) Stage of initiation of basinning (Permian to Middle Triassic), represented by disintegration of the thermogenic tectonic rise proposed above, the opening of the north branch of the ancient Tethys, the reversion of regional stress field (from compressional to tentional) and the variation of thermo-regime, all of which influenced the Chuanzhong rise in such a Way that denudation there was converted into subsidence, resulting in initiation of formation and evolution of the basin. 4) Stage of formation and evolution of the basin (Late Triassic), when predominant controlling factors for the basinning were the opening and closing of the ancient Tethys. Moreover, influences of other factors and margins on the evolution of the basin elsewhere are briefly described, characteristics of the basin during each stage and mechanism of subsidence are discussed and, subsequently, three promising prospects for petroleum are recommended.