The Pinghu Formation consists primarily of marine-continental transitional deposits. The widely distributed fluvial and tidal transgressive sand bodies comprise the main reservoirs of the Baochu slope zone in the Xihu Sag in the East China Sea Shelf Basin. These sand bodies are deeply buried, laterally discontinuous, and are frequently interrupted by coal-bearing intervals, thereby making it extremely difficult for us to characterize their hydrocarbon potential quantitatively via seismic inversion techniques, such as multi-attribute seismic analysis and post-stack seismic inversion, hindering further hydrocarbon exploration in the Xihu Sag. Here, a prestack seismic inversion approach is applied to the regional seismic data to decipher the spatiotemporal distribution pattern of the sand bodies across the four sequences, i.e., SQ1, SQ2, SQ3, and SQ4, from bottom up, within the Pinghu Formation. In combination with detailed petrology, well log, and seismic facies analysis, the secular evolution of the sedimentary facies distribution pattern during the accumulation of the Pinghu Formation is derived from the sand body prediction results. It is concluded that the sedimentary facies and sand body distribution pattern rely on the interplay between the hydrodynamics of fluvial and tidal driving forces from the continent and open ocean, respectively. Drops in the sea level led to the gradual weakening of tidal driving forces and relative increases in riverine driving forces. The direction of the sand body distribution pattern evolves from NE–SW oriented to NW–SE oriented, and the dominant sand body changes from tidal facies to fluvial facies. In addition, the sea level drop led to the decrease in the water column salinity, redox condition, organic matter composition, and the development of coal seams, all of which directly influenced the quality of reservoir and source rocks. The sand bodies in SQ2 and SQ3 are favorable reservoirs in the Pinghu Formation due to their good reservoir properties and great thickness. The high-quality source rock in SQ1 could provide significant hydrocarbons and get preserved in the sand body within SQ2 and SQ3. This contribution provides an insight into the control of the sea level change over the development of hydrocarbon reservoirs in the petroleum system from marginal-marine environments such as the Xihu Sag.