The Lower Cretaceous Xiagou Formation contains the major source rocks for the crude oils discovered in the Qingxi Sag and the South Uplift in the Jiuquan Basin, northwestern China. The Xiagou Formation source rock was formed in a closed, anoxic, reducing, alkaline lacustrine environment with a high salinity. Its high content of brittle minerals is favorable for the fracturing of reservoirs in source rock formations in the Qingxi Sag. The Xiagou Formation contains a great number of fair to excellent source rocks, and their organic matter (OM) came chiefly from plankton/algae and high plants as well as possibly bacterial organisms. The Xiagou Formation source rocks mainly contain Type II OM and some Type III and Type I OM, with good oil-generating potential. The source rock maturity is mainly in the early-mature and mature stages, and its R_o value corresponding to oil peak is about 0.8%, which is lower than classic oil peak Ro value of 1.0%; therefore, a great deal of hydrocarbon was generated before the classic oil peak R_o = 1.0%. Mature source rock in the Xiagou Formation tends to be distributed in the older members and at a greater depth. There is a better exploration potential of tight oil in the deep Qingxi Sag.