The thermal blanketing effect of sediments with finite thermal conductivity on the rate and amount of subsidence in rift basins is presented, in contrast with Mckenzie's (1978) model, which assumed infinite thermal conductivity of the sedimentary covers. The post-rift cooling of the lithosphere is shown to be very slow owing to the blanketing effect. Even 200 m.y. after extension ceases, there is still an enormous amount of residual heat in the lithosphere. With moderate thermal conductivity of the sediments ( k s = 2.0 W/mK), the maximum discrepancy in subsidence predicted by the two models (i.e. the present model and that of Mckenzie) are 2 km, 2.6 km and 3.2 km for thinning factors of 1.5, 2 and 3 respectively. Subsidence is moderately sensitive to k s when k s is greater than 2.0 W/mK, becoming more sensitive to k s when k s is less than 2.0 W/mK. The presence of mudstone would further slow down the cooling. The thermal conductivity of the sediment is shown to govern the temperature gradient of rift basins, although it has little influence on heat flow. The heat production of the upper crust and sediment comprises an important component of heat flow. Unless heat absorption in rift basins is unusually high, subsidence is insensitive to the heat production of sediments. When the thinning factor is less than 2, the mean temperature gradient of rift basins is shown to decrease quickly over a few million years, and as a result such basins are not favourable as regards hydrocarbon maturity. The Central Graben of the North Sea is chosen to test the model. The model satisfactorily predicts the subsidence history and thermal evolution, with the base Zechstein as the basement and the Cenozoic subsidence as the thermal subsidence. The best-fit value of the mean thermal conductivity of the sediments in the graben is 1.67 W/mK, and the thinning factor is about 2.