Abstract: The high?quality hydrocarbon source rocks of the world’s most ancient alkali lake are found in the Lower Permian Fengcheng formation of Junggar basin. The understanding of development model and hydrocarbon?forming evolution of the Fengcheng formation have been limited due to unsystematic analysis about its paleo?sedimentary setting up to now. This paper uses petrological and geochemical methods to study the characteristics of its landform, climate, lake water depth, salinity and water temperature, and the results show that Mahu sag is a closed lake in the depositional stage of Fengcheng formation as a whole, and its ancient landform appears asymmetric halfgrabenlike sag with steep slope in the west and gentle slope in the east, and the sizes of lake bays are distributed in it; the climatic condition of the alkali lake formation in this stage is semi?arid, characterized by that the evaporation was greater than the recharge, with seasonal humid?arid?alternate environment; the lake water depth is shallow in general, developing dark fine?grained source rocks; the water body is of high?salinity medium, the highest salinity occurs in second member of Fengcheng formation, indicating the alkali lake is most developed in this member; and the paleotemperature of the water body is relatively high, equivalent to warm to partial warm phase