The Hongshan Sag, located in the eastern segment of the northern Qaidam block, has undergone complicated tectonic evolution, which results in the controversy on the Jurassic basin prototype. Based on field geological investigation, interpretation of seismic stratigraphy, restoration of balanced cross‐section, recognition of stratigraphic contact relationship, observation of lithofacies features, and exploration of basin filling characteristics in the Hongshan Sag, the paper analyses the basin prototype, establishes a sequence stratigraphic framework, and explores episodic sedimentary features. The Hongshan Sag was a small‐scale faulted basin pulled apart by NE‐oriented extensional stress along the margin of the Qaidam Block during the Early Jurassic. During the Middle Jurassic, along with protracted rifting, the Hongshan Sag evolved into a relatively large‐scale faulted basin controlled by NE‐oriented extensional stress. The faulted basin evolved into a compressional sag during the Late Jurassic. The Jurassic strata are subdivided into 2 first‐order sequences, 3 second‐order sequences, and 5 third‐order sequences. Every third‐order sequence corresponds to an episode. The deposits of Episode I(SIII1) mainly contain coarse‐grained clasts of alluvial fan and braided river, which is locally distributed in the eastern sub‐sag. The deposits of Episode II(SIII2) mainly encompass coarse‐grained clasts of shallow water braided delta, which is distributed in discrete eastern and western sub‐sags. During the period of Episode III(SIII3), the isolated eastern and western sub‐sags connect to a whole sag, whose sediments are composed of coarse‐grained clasts of fan delta in steep slope of basin. Deposits of Episode IV(SIII4) comprises fine‐grained clasts, which are distributed throughout the basin. The deposits of compressional Episode V(SIII5) mainly consist of red fine‐grained clasts, but suffer from obvious erosion on the margin of the basin.