A 2.5 m long sediment core (XH-2) obtained from Xianghu area, near the Kuahuqiao site, were analyzed for grain size, diatom index, and geochemistry of organic carbon. The results of the total organic carbon (TOC) and stable organic carbon isotope (δ13C) in sediment samples from core XH-2 in the Xianghu area in Zhejiang Province have revealed the evolution history of sedimentary environmental and climatic changes during the breeding–prosperity–decline period of the Kuahuqiao culture. During 9300–8200 cal a BP, TOC contents were relatively high and stable, whereas δ13C values tended to be negative. This condition indicated that the climate was humid, and the sedimentary environment in the Xianghu area was stable. During 8200–7500 cal a BP, TOC contents presented a fluctuating declining trend, and δ13C values were significantly high, implying that the climate was arid, and the Xianghu area was gradually reduced to land. Thus, conducive conditions were provided for the development of the Kuohuqiao culture (7700–7400 cal a BP). From 7500 cal a BP, TOC contents obviously declined, and δ13C values were partially low, suggesting strengthened hydrodynamic force and wet conditions in the Xianghu area. This condition was related to the rise in sea level at approximately 7400 cal a BP, and the Kuahuqiao site became obsolete due to the transgression event. The TOC contents in core XH-2 were remarkably influenced by grain size, whereas no significant correlation existed between the δ13C variability and grain size. Sedimentary environment changes in the Xianghu area from 9300 to 6600 cal a BP, which was reflected by the TOC and δ13C records in core XH-2, accorded with the diatom results in this core and those in the Baima Lake area.