Abstract: The East China Sea Continental Shelf Basin is a large basin located in the eastern border of the Eurasian Plate. Under the effects of the India-Eurasia collision and the subduction of the Pacific Plate, this region has experienced three-stages of tectonic inversions since Cenozoic, especially in the Xuhu Sag. This paper presents a numerical simulation results by finite element method to the north-central Xihu Sag in an attempt to investigate the mechanism of tectonic inversion. Based on the comprehensive structural analysis and the structural geometry of the sag established with a large number of seismic profiles, a viscoelastic geologic model of 6 layers and 9 major faults was constructed for the Xihu Sag. Simulation results show that the subsidence caused by the shearing movement characterized by transtension in early stage and transpression in later stage is the major force controling the inversion process and its propagation from west to east. Based on quantitative analysis of vertical displacement field of the Sag, this paper identified a tectonic inversion process with uplifting in the west and subsiding in the east after the first-stage of inversion; and then subsiding in the west and uplifting in the middle and east after the second and third-stages. The simulation results are well consistent with the process of uplifting or subsidence obtained from the denudation thickness and the distribution of low compression stress, displaying certain correlation with the distribution of oil reservoirs. The results indicate the plausibility of similar deformation controls. In conclusion, the formation of the tectonic inversion in the Xihu Sag is controlled by the adjustment of the stress field from dextral transtension to sinistral transpression caused by the change in subduction rates and direction of the Pacific Plate and the Philippine Sea Plate.