The compressional basins of western China result from the stress caused by the northward collision of the Indian plate. Most of the large intracratonic basins between the fold belts have undergone a long history of differentiation and superposition that has resulted in the prolific oil and gas reserves of the Tarim, Junggar and Qaidam basins. On the frontal edge of the collisional folded belts there are numerous deep depressions infilled with Meso-Cenozoic sediments, such as the Jinquan Basin. Some intermontane basins, such as the Turpan Basin, are filled with Meso-Cenozoic sediments and are located between parallel compressional folded belts. The geological history and hydrocarbon habitat of the petroliferous basins of western China are summarized, with an emphasis on the more recent new discoveries in the frontier Tarim, Turpan, Junggar and Qaidam basins. Large potential traps exist and significant exploration success is anticipated in the future.