Bottom-simulating reflectors (BSRs) were observed beneath the seafloor in the northern continental margin of the South China Sea (SCS). Acoustic impedance profile was derived by Constrained Sparse Spike Inversion (CSSI) method to provide information on rock properties and to estimate gas hydrate or free gas saturations in the sediments where BSRs are present. In general, gas hydrate-bearing sediments have positive impedance anomalies and free gas-bearing sediments have negative impedance anomalies. Based on well log data and Archie's equation, gas hydrate saturation can be estimated. But in regions where well log data is not available, a quantitative estimate of gas hydrate or free gas saturation is inferred by fitting the theoretical acoustic impedance to sediment impedance obtained by CSSI. Our study suggests that gas hydrate saturation in the Taixinan Basin is about 10 - 20% of the pore space, with the highest value of 50%, and free gas saturation below BSR is about 2 - 3% of the pore space, that can rise to 8 - 10% at a topographic high. The free gas is non-continuous and has low content in the southeastern slope of the Dongsha Islands. Moreover, BSR in the northern continental margin of the SCS is related to the presence of free gas. BSR is strong where free gas occurs.