Lacustrine organic-rich shales are widely developed within the Oligocene Biyang Depression in the Nanxiang Basin in east China and across Southeast Asia. These shales have been proven as hydrocarbon source rocks of crude oil, as well as sources and reservoirs of shale oil. Understanding the deposition of these shales is essential to reconstruct the paleoenvironment and paleoclimate during the Oligocene in east China, as well as target the potential shale oil resources. Based on X-ray diffraction, organic and inorganic petrologic, organic and inorganic geochemical, and stable isotopic analyses, paleoenvironment, paleoclimate and hydrocarbon potential of the lacustrine organic-rich shales in the Oligocene Hetaoyuan Formation were investigated. The mineral composition of Hetaoyuan Formation organic-rich shales is dominated by clay minerals, followed by quartz, plagioclase, calcite, dolomite, pyrite and gypsum. Six lithotypes are identified, including siltstone, silty shale, clay shale, calcareous shale, dolomite shale and massive mudstone. The organic matter (OM) of the organic-rich shales is dominated by type I kerogen (lamalginite). Maturity parameters (T-max, biomarker ratios and calculated vitrinite reflectance) suggest that the OM enters the oil window maturity. High TOC and generative potential, together with high contents of brittle minerals (including quartz, plagioclase and carbonates) reveal the Oligocene Hetaoyuan Formation hold good to very good potential of shale oil exploitation. Six organic-rich shale layers have been identified in the Hetaoyuan Formation (shale layer 1 to 6, from top to bottom). Among them shale layers 5 and 3 hold the best shale oil potential and therefore be investigated in the present paper. Shale layer 5 was deposited in a semi-deep lacustrine environment under the moderately warm-humid paleoclimate, further dividing into lower, middle and upper units. Relatively low TOC contents (ay. 2.6 wt%) in the lower unit are probably caused by high sedimentation rate. High bioproductivity under favorable preservation conditions led to relatively high TOC contents (ay. 3.6 wt%) in the middle unit. Less reducing conditions together with moderate low bioproductivity resulted in relatively low TOC contents (ay. 2.6 wt%) in the upper unit. Warm-humid paleoclimate prevailed during deposition of shale layer 3, deepened water depth and formed a deep lacustrine environment. The stratified water column led to stable anoxic condition and photic zone euxinia in the saline, deep lacustrine environment, which enabled the accumulation of high amounts of OM (ay. 4.9 wt% TOC) under excellent preservation (ay. HI: 710 mg HC/g TOC). The results of core scanning analysis indicate that formation of the laminated shales probably controlled by seasonal fluctuations of paleoclimate.