Abstract: On the basis of field investigation and some others' former results,the seismological and geological background in Xiaoliangdi reservoir area and its vicinity is analyzed.The factors that can induce earthquakes,such as regional stress state,fault activity,stratigraphic lithology etc,are also studied.The grey cluster method is briefly introduced.Using the method,we assessed the possibility and magnitude of potential induced earthquakes in the reservoir.The results show that the possibility to induce earthquakes exists in the reservoir,especially in the middle part of the reservoir area.The maximum magnitude of induced earthquakes predicted is about Ms5.