Detailed paleontological and sedimentological data from the Pliocene interval of core XK-1 allow for a detailed documentation of the carbonate system in the northern South China Sea (SCS). Six facies are identified. Based on a comprehensive analysis of facies changes, the paleoclimatic conditions and paleowater depths during the Pliocene in the Xisha area in the northern SCS are reconstructed. The changes in the abundance of the algal genus Sporolithon and the planktonic foraminifera species Orbulina universa, Globigerinoides quadrilobatus, Globorotalia menardii, and Globigerinoides obliquus indicate that the climate in the SCS gradually became warmer from 5.3 to 4.3 Ma and then cooled from 4.3 to 2.6 Ma, which was attributed to the changes in atmospheric pCO2. The high abundance of encrusting acervulinids and coralline algae and the low coral abundance suggest periods of elevated nutrient level, possibly linked to increases in nutrient input from the higher latitudes. Distinct changes in coralline algal and foraminiferal facies help the reconstruction of paleowater depths during the Pliocene in the Xisha area. The water depth was generally rising from 5.3 to 4.3 Ma and declining afterward, which was similar to that in the Yinggehai–Qiongdongnan Basin (located on the northern part of the Xisha area). This similarity indicates that there was a common factor controlling the long-term variation in water depth in the northern SCS. The comparison between paleowater depth changes and global eustatic sea-level fluctuations indicates that the regional tectonic subsidence was important from 5.3 to 4.7 Ma. Such subsidence was probably related to thermal subsidence after the magmatism intrusion activity beneath the basement at the initial stage of the Pliocene. This study indicates that the comprehensive analysis of algal and foraminiferal facies has great potential to reconstruct the climatic conditions and water depths in the ancient times.