Abstract: The Neocene in the southeast Bohai Sea consists mainly of lacustrine, shallow water deltaic and fluvial facies. Drastic facies changes have made sandbody prediction very difficult. Palaeo-water depth of a lake is one of the key factors to sandbody distribution pattern. Based on geochemical data, INPEFA, paleontological and lithological data, the Neogene palaeo-water depth in the Penglai 7 area is investigated. The study area is located on the South of Bodong Low Uplift of the Bohai Sea.Results show that the area surrounding the Penglai 7 area was a fresh water lake with gentle slopes in Neogene. Lake level fluctuated frequently. The average depth of the area was around 3 m when the Guantao Formation was deposited. By the end of Guantao Formation, the lake level started rising. In the beginning, the water depth is deeper in south. However, it was reversed by the end of Guantao Formation and it became deeper in north. Water depth reached its peak in Late Minghuazhen Formation. The average depth of Penglai 7 area was around 4-6 m in the time when the Lower Member of Minghuazhen Formation was deposited.