The Bayingebi Formation in the northeast of the Yin'e Basin developed abundant oil shale resources. A better understanding of the formation mechanism of these oil shales is of great significance for reconstructing the palaeogeographic environment of the Early Cretaceous in Northwest China and exploring potential unconventional oil and gas resources. In this study, a large amount of drilling data was used to reconstruct the sedimentary sequence stratigraphic framework, and the plane distribution of sandstone bodies and sedimentary facies in different system tracts was recovered. The lower member of the Bayingebi Formation (K 1 b 1 ) is identified as a developing low-stand system tract. The upper member (K 1 b 2 ) contains three system tracts, including a transgressive system tract (TST), a high-stand system tract (HST), and a regressive system tract (RST). Thick oil shale developed in the HST and the terrigenous detrital supply of the lake mainly came from the south and southwest. Petrology and organic geochemistry are used here to characterize the oil shale and mudstone. The oil yield of oil shale is primarily distributed between 3.5 and 6.5 wt %, and it is mainly type I kerogen (including lamalginite and telalginite). The oil yield of mudstone is lower than 3.5 wt %, and it is mostly type II 1 kerogen (including sporinite and telalginite). According to the analysis of provenance and paleoclimate from element geochemical indicators, the parent rocks of the Bayingebi Formation oil shale and mudstone are mainly of Permian andesite, which represent the tectonic background of a continental island arc. During the transition from the TST to HST, the paleoclimate changed from cool-semidry to warm-semihumid, the paleotemperature increased about 10 °C, the lake level gradually increased, and the degree of chemical weathering gradually strengthened. The early Aptian continental paleoclimate change in the Yin'e Basin coincides with coeval rising global paleotemperature. This study provides a basis for the response of continental paleolakes to the oceanic anoxic event (OAE 1a) and provides a reference for the organic matter enrichment mechanism of the black shale of the Bayingebi Formation.