In the southern Huanghai (Yellow Sea), seismic exploration for oil and gas in pre‐Tertiary strata encounters some difficulties, such as poor geological conditions at depth, screened seismic waves, and serious attenuation of seismic energy, so that the reflective signals from the Mesozoic and Paleozoic systems cannot be recognized. To solve this issue by other approach, an experiment of seafloor magnetotelluric (MT) sounding was carried out in this region in May 2006. This work has deployed 3 measurement sites on the Wulian slope and Jiaozhou sag in the basin and obtained good data. In this article, we present the difference of data processing between the marine MT and routine MT soundings, and analyze the influence of marine electromagnetic noise on the MT observation on seafloor. We propose correction methods for the horizontal attitude and orientation of the instrument as well as removal of marine noise. Using these and other regular methods, we have performed data processing and inversion, and a comprehensive analysis of geology and physical properties. The result shows that there are residual Paleozoic strata below the seafloor in the southern Huanghai. This is of great significance for prospect assessment of oil and gas in the pre‐Tertiary system in this region. The experiment also demonstrates that the marine MT technology can play an important role in exploration of relict basins of Paleozoic time.