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Geothermal resource is indispensable as a clean, renewable, stable and cheap resource. Nowadays in China, the Gonghe Basin, located in northeastern Qinghai Province, has been thought to be a promising geothermal area. To explore geothermal energy potential in and around the Gonghe Basin, geophysical means including magnetic and gravity methods were used to plot distribution. Firstly, we inversed Moho depth and Curie point depth in and around the basin using gravity and magnetic data, respectively, through an improved Parker–Oldenburg algorithm. Secondly, seven different thermal models were established, considering radiogenic heat, basement depth, anomalous heat source and simulated corresponding temperature field and heat flow. These were analyzed numerically and we found the high heat flow in the Gonghe Basin co‐acted with radiogenic heat, an anomalous heat source and conductive heat. The distribution of seismic activities indicates that the Langshan–Wuwei–Gonghe Fault might have provided channels for transporting heat effectively. [ABSTRACT FROM AUTHOR]