The study of source rocks is a key component in the exploration and discovery of hydrocarbon plays in the offshore petroliferous basins of China. Geochemical analyses, drilling, seismic, and microfossil data were integrated to document the formation mechanism of lacustrine source rocks contained in the Wenchang Formation in the Zhu I Depression of the Pearl River Mouth Basin, China. Several factors that control the development of lacustrine source rocks were evaluated in this study, including tectonics, sedimentary conditions, palaeoclimate, the supply of organic matter, and redox conditions. The deposition and occurrence of source rocks is a combined function of these factors. Lacustrine source rocks are characterized by high organic matter contents (average TOC value = 1.33 wt.%) and are dominated by type I and type II1–2 kerogen, which primarily originate from planktonic algae. The rifting of basement rocks, syn‐sedimentary faults, and palaeoclimate played significant roles in controlling the geochemical properties of the source rocks (e.g., controlling the abundance and types of organic matter). The Eocene lacustrine source rocks were deposited when the palaeoclimate was characterized by humid to semi‐humid, subtropical to tropical weather that did not have a stable temperature or humidity. Controlled by large‐scale faults, “Half‐graben patterns” and “Graben patterns” are the two main palaeotopographic patterns where the thermal stratification of deep lake water resulted in flourishing planktonic algae in its surface zones. Dysoxic to anoxic conditions prevailed during the deposition of the lacustrine source rocks. An underfilled basin situation caused the occurrence of abundant organic matter during the period of maximum surface flooding.