In view of the recent oil and gas dicoveries in the Bombay Offshore basin, its detailed geology has been worked out in terms of its source rock and reservoir potential. An agewise, layer‐cake lithofacies analysis and five depositional model maps from Paleocene to Middle Miocene age, together with a number of paleotectonic sections has led to the reconstruction of a xeneralized depositional model of the basin as a whole. This proposed depositional model envisages the Bombay Offshore basin as a shelf‐to‐basin carbonate model. During Paleogene and Early Neogene time the clastic supply by the proto‐Narmada river from the NE resulted in delta progradation up to the Dahanu depression, which was a region of pro‐deltas and lagoons with a considerable thickness of finer clastics. Beyond the Dahanu depression, the Bombay High and Bassein‐Alibag‐Ratnagiri shelf remained open carbonate platforms, while the DCS area was the locale of shelf‐edge carbonate build‐up.The potential targets for exploration are the deltaic sandstone to the north in the Tapti area—particularly where the sandy facies interfingers with the shales and the porous limestone horizons in the Bombay Platform, Bassein‐Alibag‐Ratnagiri shelf and the DCS trend. The Dahanu depression is thought to be the main source rock area.