According to the Grand Dictionary of Chinese Surnames, there are over 11,000 Chinese surnames in recorded history. However many of them have become obsolete. Currently over 3000 of them are still in use but common ones number slightly over 500.
How are these surnames created? Here are some of the ways.
In ancient society, primitive men develop special relationship with natural and animal objects. As time went by, some of these objects were adopted as surnames, example Xiong (bear) or Feng (phoenix).
Others adopt the name of the state or place that they live in or originate from. Examples include Song and Wei.
A common method is to use the name of one’s occupation. For example a potter may use the name Tao (meaning pottery).
Some would adopt the title of official post either in full or partially. For example the ancient title of the Minister of War is SiMa. It was adopted in whole as a surname. Over time the surname was simplified to either Si or Ma.
Yet another way is to adopt the name of surrounding landmarks. For example some who live near a pond may adopt the surname Chi (meaning pond). Others living near a mountain or river may adopt the surname Shan (meaning mountain) or Jiang (meaning river) respectively.
It is also not uncommon to adopt the name of their grand ancestors in order to commemorate them.
In ancient times children were called certain names to indicate their seniority. For example the eldest is called Bo followed by Zhong (for the second), Shu (for the third) and Ji (for the fourth). These were later adopted as surnames.
Some were conferred special surnames by the Emperor in honor of the outstanding services rendered to the courts. By the same token some who have annoyed the Emperor are given bad surnames such as Shao (meaning spider) and Fu (meaning poisonous snake).
Surnames are also adopted from colors e.g. Hong (meaning red) and Zi (meaning violet or purple). Others from position e.g. Dong (meaning east) and Zuo (meaning left).
They are also adopted from seasons e.g. Chun (meaning Spring) and Dong (meaning Winter) and from the names of ancient dynasties such as the Xia, Zhou or Han dynasties.
Surnames are also adopted from plants and insects. Examples include Hua (meaning flowers), Tao (meaning peach), Chong (meaning worm) or Yi (meaning ant).
This may surprise you but surnames are also adopted from numbers. Examples are Ling (meaning zero), San (meaning 3), Shi (meaning 10), Qian (meaning thousand) and so on.
The methods that I have described above are no means exhaustive and there are many others ways that surnames were derived.
You can find a list showing the 100 most popular Chinese surnames in the Chinese Almanac or Tung Shu or Tong Sing.
Have fun unravelling your own!