If I use most of the references from a thesis but not the exact same sentences, is it plagiarism? There is a PhD thesis which is inline with my MSc thesis topic. 

The author has collected and classified a huge number of references for the background.
While I am writing the background section, if I use the references he used, but not the sentences and organization, is it still plagiarism?

I am talking about 50-60 references out of 250. They are very well classified and right-to-the-point. 

I also cited his thesis. However, referring to one thesis for 40 references is silly.

What should I do?
Working from a bibliography in another paper is not plagiarism.  It's actually a  good research technique.  As you read those papers, check their bibliographies, too, and so on.  Pretty soon you will have thorough coverage of the subject.

Do note that you cannot just plop those 50-60 or so references into your own bibliography but do nothing else, nor paraphrase what someone else has said about them, but without reading them.  That's called reference padding and is academic misconduct.  You have to actually read the papers.  When you do that, you may find that some of them don't fit your needs as well as you may have at first thought.  You will also find it easy to write your own thoughts about those papers, and so will not have to worry about paraphrasing another author.