Abstract: Based on the geological background, the organic geochemical comprehensive evaluation on the source rocks in the study area was carried out, and the paleoenvironment of source rocks in the Pinghu Formation in the Xihu Sag were analyzed. The content and variation of trace elements in the three layers of the Pinghu Formation, the corresponding relationship between the paleosalinity, paleoredox conditions, and the paleoclimate during sedimentation were studied. Combined with the relationship between organic carbon content and elements, the paleoenvironment and controlling factors of the source rocks were clarified. Results show that ① all the sections of the Pinghu Formation contain coal, and the organic matter in the source rock is abundant in the types of Ⅱ₂ -Ⅲ that are in the mature-high mature stage and have good hydrocarbon generation potential. Meanwhile, the source rocks in the middle section of the Pinghu Formation are better than that in the upper and lower sections. ② The water body was fresh to brackish water with local transgression due to oscillation of local water body. The overall paleoenvironment of Pinghu Formation was in oxidation-reduction. The paleoclimate was mainly warm-humid, and then changed gradually to warm-humid. ③ The development of the source rocks was controlled by mainly paleoclimate and paleoproductivity as indicated by element ratio and organic carbon content analyses. The ancient warm and humid conditions favored the development of the source rocks, and the high paleoproductivity enhanced the enrichment of organic matter in the middle section of Pinghu Formation.