Using an observation data set of temperature and the Simple Ocean Data Assimilation (SODA), the decadal variability of upper ocean heat content (0–400 m; hereafter, OHC) in the South China Sea (SCS) was investigated for the period from 1958 to 2007. Decadal variability was identified as the dominant mode of upper OHC besides the seasonal cycle. According to decreasing or increasing OHC, four periods were chosen to discuss detailed processes behind OHC variability in the SCS; the four periods are 1958–1968, 1969–1981, 1982–1992, and 1993–2003. Results show that advection was the major factor for decreasing (increasing) OHC during 1958–1968 (1968–1981). During 1982–1992 and 1993–2003, the net surface heat flux was the main contributor to the variability of OHC besides the advection. The OHC, advection and net surface heat flux had significant positive trends during 1992–2003. The spatial characteristics of OHC variability and heat budget in the Luzon Strait, west of Luzon Island, and in the Xisha warm eddy region are also discussed.