Organic petrological and organic geochemical investigations have been carried out on Eocene lacustrine deposits from the Western Depression of the Liaohe Basin (NE China). The purpose was to conduct a systematic organofacies classification of these rocks, to determine their source rock potential and hydrocarbon characteristics, and to study depositional processes within this palaeo-lake setting. Rock-Eval data and molecular biomarkers indicate that samples analysed were immature in terms of thermal maturation. Three distinct organofacies have been identified within the ES4 member of the Shahejie Formation. The depositional model envisages the formation of good to excellent oil-prone source rocks in a shallow saline-alkaline lake with a stratified water column; of source rocks with moderate source potential in a deep and freshwater lake; and of poor quality source rocks towards the lake margins. The shallow lake organofacies is characterised by high total organic carbon contents (up to 17.6 %) and high Hydrogen Index values (up to 908 mg HC/g TOC). The laminated sediments contain elevated amounts of fluorescing amorphous organic matter (OM) and lamalginite. High primary production dominated by cyanobacteria together with anoxic bottom waters and a paucity of terrestrial vegetation in an and climate resulted in the deposition of Type I OM. The presence of monoaromatic carotenoids, typically derived from photosynthetic purple and green sulphur bacteria Chromatioceae and Chlorobiaceae, suggests a water body in which an anoxic photic zone occurred at least periodically. The source rocks deposited in this type of lake have the potential to generate high-wax paraffinic petroleum at high subsurface temperatures (up to 159degreesC at a heating rate of 5.3degreesC/million years). The quality and quantity of the OM within the freshwater organofacies (Shale I, Shale II) were determined to be lower. Petrologic observations point to the absence of laminations and the presence of Botryococcus brounii telaiginite. The abundance of lycopone and its aromatised diagenetic analogues confirmed the presence of this algal species. Generally low concentrations of gammacerane and high pristane/phytane ratios indicate a low salinity, hydrologically open environment in which oxic conditions generally prevailed, resulting in relatively poor preservation of OM. Sediments of poor source rock quality deposited in the marginal fan-delta setting (the Shu-Du area) can be distinguished visually by the presence of terrigenous particles (vitrinite, inertinite and terrigenous liptinites), and geochemically by the presence of phenols in the pyrolysates.