A total of 388 surface sediment samples taken from the northern South China Sea (SCS) continental shelf were analyzed to characterize the signature of their rare earth elements (REEs). The average REEs concentration was 192.94 μg/g, with a maximum of 349.07 μg/g, and a minimum of 32.97 μg/g. The chondrite-normalized REEs pattern exhibits a remarkably light REEs accumulation, a relatively flat heavy REEs pattern, and a negative Eu anomaly. We subdivided the study area into three zones using the characteristics of REEs and statistical characteristics. Zone I: continental shelf off western Guangdong Province. Here, the sediment provenance is mainly river-derived from the Pearl River, Taiwanese rivers, and those in the adjacent area. Zone II: Qiongzhou Strait and Leizhou Peninsula. Here, the sediment provenance consists of the Qiongzhou Strait and the Hainan Island. Zone III: Hainan Island and SCS slope sediments are dominated. The REEs compositions are mainly controlled by source rock properties, hydrodynamic conditions, and an intensity of chemical weathering. We reconstructed the sediment dispersal and transport route using the REEs compositions, grain size, and other geochemical characteristics throughout the study area.