Western Yunnan is an important area for Mesozoic marine strata, development of which helps to reconstruct paleoenvironments in the eastern Tethys. To bring knowledge of eastern Tethys up to that of western Tethys, this study focuses on its sedimentary characteristics and paleoenvironmental significance concentrating on the Xiushan section of the Simao Basin with analyses of the petrology, element geochemistry, and C‐O‐Sr isotopes. Samples are micrite, bioclastic limestone, marl, and mixed calcareous clastic rocks with the 87Sr/86Sr values of limestone ranging from 0.708255 to 0.708933; the δ13C values of the limestone range from –5‰ to +1.5‰ and the δ18O values range from –13.7‰ to –9.1‰. Based on the results, it is concluded that the Middle Jurassic limestones in the Simao Basin were deposited in a tidal flat environment with a strong influence of terrigenous input. At least one transgression event occurred during the depositional period. The paleoclimate as a whole changed from dry hot to humid hot and back to dry hot again. These enriched and improved results provide further data support for a comparison of the paleoenvironments between the eastern and western Tethys.