The depositional history of the paleo-submarine channel plays an instrumental role in controlling the present-day heat flows and geothermal gradients of the Lower Fangliao Basin, a slope basin situated at the upper accretionary wedge, offshore southwestern Taiwan. This wedge is formed from the collision of the Luzon Arc and the Chinese continental margin. The basin has been referred as one of the gas-hydrate prospective areas within the vicinity, where occurrence of mud diapirs and bottom-simulating reflectors (BSRs) is present. Estimated BSRs-derived geothermal gradients infer an average value of 33 °C km−1, while estimated heat flows imply an average value of 41 mW m−2. Closely spaced thermal probes and infrared imaging from piston cores revealed average values for geothermal gradients and heat flows of 55 °C km−1 and 62 mW m−2, respectively. Discrepancies between both measurements are related to the sensitivity of direct thermal measurements over shallow fluid flux, where shallow geothermal gradients increase locally as the fluid migrates upward. Since the BSRs are situated at depths below cut-and-fill channel deposits in the basin depocenter, the channel facies is interpreted as deposition of an active channel prior to being intruded by mud diapirs and abandoned in the Pleistocene. An array of data, including high-resolution seafloor bathymetry, seismic facies, and distribution of thermal anomaly, reveal that the paleo-channel had flowed through the Lower Fangliao Basin following the strike of slope basins and deposited a stacked series of turbidite sands. Submarine ridges in the upper slope of the accretionary wedge developed as thrust-related anticlines, which bordered the slope basins. Rapid deposition and sediment burial in offshore southwestern Taiwan had caused insufficient dewatering process in the paleo-channel sediments, leaving high water saturation within pore spaces and overpressured the sediments. These, together, lead to lower heat flows and thermal gradients (thermal blanketing effect) and contribute to deepen the base of gas hydrate stability zone. Further mud diapiric intrusions and uplifting of seafloors had blocked the course of paleo-channel. The Lower Fangliao Basin was abandoned following the channel course shifted to the south along the present-day Gaoping Canyon course.