A two-dimensional basin-modeling study was employed to analyze the petroleum generation and migration history of the Qingshui sag in the western depression of the Liaohe basin, northeast China. The Eocene–Oligocene ES4 and ES3 members of the Shahejie Formation (ES) are the most important source rocks responsible for the major hydrocarbon accumulations. Two sandstone beds of fan-delta origin, the Dujiatai (DJT) and the Xinglongtai (XLT), are the primary reservoir rocks in the study area. The model indicates that two migration systems can be differentiated; they are separated by the thick shale beds of the middle ES3 and ES1, which acted as important regional seals for the lower and the upper systems, respectively. The DJT bed is the most important pathway for migrating hydrocarbons in the lower system, whereas the XLT bed is a significant factor in the upper system. Calibration of the model with thermal maturity data indicates that the geological evolution is consistent with typical heat-flow values for rift basins in the range between 85 and 48 mW/m². All source units reached maturity during the major burial phase, which extended from the Oligocene to the Eocene. Simulation results further indicate that after a cooling period, renewed heating occurred, and additional hydrocarbons were generated during the last 5 m.y., particularly in the southern part of the basin. Sensitivity tests indicated that the faults, particularly the two main faults, served as important conduits for petroleum throughout most of the geological history. The main phase of migration occurred between the Eocene and Oligocene and was responsible for major accumulations in the west slope, the central anticline, and the central rise. Additional migration between 5 Ma and the present is significant in the southwestern area and may have brought about petroleum accumulation in the central depression and central rise.