To better understand the seafloor hydrothermal circulation at the passive rifted margins, we present a detailed geochemical investigation of epidote veins in eight altered basalts from IODP Hole U1502B, which is located in the continental-oceanic transition zone at the northern margin of South China Sea (SCS). The studied epidotes have XFe values [XFe = Fe3+/ (Fe3+ + Al3+)] of 0.21 to 0.37, suggesting Fe-rich epidote in composition and equilibration in lower greenschist facies. The occurrence of cataclastic and zoning structures in the epidotes suggests variations in mineral growth environment. Combined rare earth element and Sr-isotope signatures of these epidotes revealed the involvement of three types of circulating fluids, i.e., modified seawater (negative Ce anomaly, and 87Sr/86Sr = -0.708), hydrothermal fluid (positive Eu anomaly, and 87Sr/86Sr = -0.706), and magmatic fluid (negative Eu anomaly, and 87Sr/86Sr = -0.704). These observations suggest that basement epidote veins in Hole U1502B were likely formed under a tectonically active and open environment, with the growth process and compositions of epidotes varying during the evolution of circulating fluids. A new seafloor hydrothermal circulation model is envisaged at Hole U1502B, in which an intrusive dike instead of a magma chamber supplied the heat source, and the extensional faults formed during continental breakup to seafloor spreading provided the channel of upwelling circulating fluids. The low heat flux of intrusive dikes caused the shallow occurrence depth of basement epidote veins, which were formed in the discharge zone of the hydrothermal system. Our study provides new mineral chemistry constraints on the hydrothermal process and environment at the passive rifted margin of SCS, which is different from those suggested for a typical fast-spreading mid-ocean ridge.