The high-resolution sequence stratigraphic theories, and the methods of wavelet analysis and frequency spectral analysis were used to define the sequence stratigraphic framework of the Upper Triassic Yanchang Formation, which have five long base-level cycles and 21 to 25 middle base-level cycles. Based on studying the relationship between the sequence stratigraphic chronostratigraphic framework and reservoir development, it is found that the development and distribution of reservoir has been apparently controlled by the A/S and boundary of sequence stratigraphy of Yanchang Formation. Sandstone reservoirs with relatively good properties occurred mainly at the early stage of the ascending long base-level cycle and the late stage of the descending middle base-level cycle, especially at both sides of the interface of long-term base level cycle and middle-term level cycles. Sour fluids migrate along the interface, favoring the formation of induced porosity, which can improve the reservoir. Compared with traditional method, this method can eliminate the uncertainty of artificial division of sequence, improve precision and accuracy of cycle division and correlation, and improve the success rate of oil and gas exploration.