The Lunpola Basin is a fault‐depression type residual Palaeogene continental basin, and it is the only basin located in Tibet in which industrial oil has been discovered. In recent years, as research has progressed, quantities of oil shale and asphalt were discovered in the adjacent Nyima Basin, which shows a good prospect for exploration. In this study, the organic geochemistry, n‐alkanes, biomarkers, and maturity parameters of the samples were analysed using gas chromatography (GC) and mass spectrometry (MS). The organic geochemistry revealed that the Niubao Formation has a high organic matter abundance (total organic carbon content of 0.15–8.43 wt% and hydrogen index of 31.25–1721.15) and is dominated by type I–II2 kerogen. The GC and MS analyses indicate that the oil shales of the Nyima Basin have a high organic matter abundance and a good hydrocarbon production potential, and the main organic matter sources were aquatic algae and terrestrial plants, as evidenced from the unimodal/bimodal distributions of the n‐alkanes. Besides, the high phytoalkane, gammacerane, homohopane, and gypsiferous mudstone contents in the Nyima Basin indicate a deep, hypoxic, well‐stratified, saline lacustrine sedimentary environment. Under warm climatic conditions, accelerated continental weathering increased nutrient input, leading to water‐mass eutrophication and algal blooms in the water column, while arid conditions and intensified evaporation induced saline stratification, leading to enhanced preservation of organic matter and the formation of high‐quality source rock layers in this lake basin. Therefore, the Eocene global greenhouse effect may have been the main reason for the formation of the large sets of oil shales in the Nyima Basin.