The sedimentary rocks of the Dishuiquan Formation represent an important potential source for volcanic rock reservoirs and record the transition of the depositional environment from marine to terrestrial during paleo-Junggar oceanic subduction. The source rock potential and paleoenvironment of mudstones from Dishuiquan Formation in Eastern Junggar, were determined by organic petrography, Rock-Eval, molecular and stable carbon (delta C-13) analyses. TOC, S-2, and hydrogen index (HI) values suggest a fair to good organic richness in mudstone samples from the C-2 well. Moreover, an early mature to mature state for all the samples is inferred based on the Rock-Eval and biomarker parameters. The maceral composition, molecular geochemistry and carbon isotopic results for kerogen reveal that all the mudstone samples are characterized by a mixed organic matter assemblage (Types with relatively high percentages of terrigenous organic matter. The low to intermediate values of Pr/Ph and the high abundances of beta-carotene and gammacerane indicate the presence of a dysoxic, reducing, high-salinity sedimentary environment during the deposition of the Dishuiquan Formation. Numerous parameters derived from the organic geochemical analyses indicate that the terrigenous organic matter increased with decreasing salinity and oxidation in the sedimentary environment. This study concludes that a warm, wet climate provided a continuous fluvial input of terrigenous plant debris and fresh water. The organic geochemical data, combined with the tectonic setting, reveal a restricted, semi-closed marine depositional environment during the deposition of the Dishuiquan Formation in the early Carboniferous. (C) 2015 Elsevier B.V. All rights reserved.