A striking high magnetic anomaly belt (HMAB) trending almost SW-NE is situated along the continental shelf edge off the southeastern Chinese continent. It extends northeastward to central Taiwan and gradually vanishes there. In this paper, magnetic simulation is performed and compared with other geological and geophysical data to establish a better understanding of the nature of the magnetic source of HMAB and how it makes HMAB vanish. The magnetic simulation was performed with a geometrical constraint from the seismic velocity structure published in literature. Our simulation shows that there is a layer of material with high magnetic susceptibility (which should be the source of HMAB), situated near the center of the thick crust, along the trend of HMAB. This source layer should be the magmatic relic intruded along the continental shelf edge off the Chinese continent during the initial stage of the opening of the South China Sea. The change in physical conditions or large-scale dislocation of the source material due to intensive and complicated crustal deformation are concluded to be the possible causes of the gradual vanishing of HMAB near its northeastern end.