Mesoscale eddy activity and its modulation mechanism in the South China Sea (SCS) are investigated with newly reprocessed satellite altimetry observations and hydrographic data. The eddy kinetic energy (EKE) level of basin-wide averages show a distinct seasonal cycle with the maximum in August-December and the minimum in February-May. Furthermore, the seasonal pattern of EKE in the basin is dominated by region offshore of central Vietnam (OCV), southwest of Taiwan Island (SWT), and southwest of Luzon (SWL), which are also the breeding grounds of mesoscale eddies in the SCS. Instability theory analysis suggests that the seasonal cycle of EKE is modulated by the baroclinic instability of the mean flow. High eddy growth rate (EGR) is found in the active eddy regions. Vertical velocity shear in the upper 50-500 m is crucial for the growth of baroclinic instability, leading to seasonal EKE evolution in the SCS. Mesoscale eddy activity and its modulation mechanism in the South China Sea (SCS) are investigated with newly reprocessed satellite altimetry observations and hydrographic data. The eddy kinetic energy (EKE) level of basin-wide averages show a distinct seasonal cycle with the maximum in August -December and the minimum in February-May. Further, the seasonal pattern of EKE in the basin is dominated by region offshore of central Vietnam (OCV), southwest of Taiwan Island (SWT), and southwest of Luzon (SWL), which are also the breeding grounds of mesoscale eddies in the SCS. Instability theory analysis suggests that the seasonal cycle of EKE is modulated by the baroclinic instability of the mean flow. High eddy growth rate (EGR) is found in the active eddy regions. in the upper 50-500 m is crucial for the growth of baroclinic instability, leading to seasonal EKE evolution in the SCS.