Volcanic activity was quite frequent during the deposition of the Late Carboniferous Ha’erjiawu Formation in the Santanghu Basin. The petrology and organic and inorganic geochemical indicators were used to investigate hydrocarbon potential, paleoenvironmental conditions and organic matter enrichment of the mudstones. The results show that the oil generation capacity of the Ha’erjiawu Formation mudstones, which has abundant oil-prone organic matter (Type II kerogen with hydrogen index values mainly ranging from 250 to 550 mg HC/g TOC) in mature stage (Tmax values mainly ranging from 435 to 450 °C), is considerable. The Ha’erjiawu Formation was deposited in a dysoxic, freshwater-mildly brackish, and warm-humid environment. During its deposition, the Ha’erjiawu Formation received hydrothermal inputs. The volcanic hydrothermal activities played an important role in the organic matter enrichment. In addition, the total organic carbon (TOC) is significantly positively correlated with the felsic mineral content, but it is negatively correlated with the carbonate mineral content and C27/C29 ratios, indicating that terrigenous organic matter input also contributed to the primary productivity in the surface water. Therefore, the formation of the high-quality source rocks in the Ha’erjiawu Formation was jointly affected by the hydrothermal activity and the terrigenous organic matter input.