Understanding the interrelationship between diagenesis and hydrocarbon emplacement is crucially important for investigating tight sandstone reservoir‐forming processes. In this paper, efforts were made to elucidate this interrelationship in the Jurassic Badaowan Formation tight sandstone reservoirs of the southern margin of the Junggar Basin (SJB), China. Four lithofacies were clarified, including quartz cemented‐dissolution facies (QCDF), carbonate cemented facies (CCF), authigenic clay mineral facies (ACMF), and matrix‐caused tightly compacted facies (MCTF). Weak hydrocarbon migration forces and poor hydrocarbon preservation conditions were identified to be the main reasons for the limited hydrocarbon accumulation scale. The reservoir densification process, mostly before 100 Ma, was associated with four aspects, including the high matrix content, the intensive carbonate cementation, the limited dissolution and alteration, and the development of authigenic clay minerals. Hydrocarbons in the Badaowan Formation reservoir were demonstrated to be emplaced after reservoir densification. Overpressure resulting from hydrocarbon expulsion and tectonic compression should have acted as the main driver for hydrocarbon migration. Particularly, the tight sandstone in the Qigu anticline was charged with overpressurized hydrocarbons sourced from the middle‐lower Jurassic source rocks at the footwall of the Qigu north fault since the early Jurassic. The tectonic compression in the late Neogene eroded the core of the Qigu anticline, which destroyed the initially large palaeo‐oil reservoir into smaller ones. The first‐stage hydrocarbon emplacement greatly affected the diagenesis and physical properties of the reservoir. It played an important role in inhibiting cementation, promoting dissolution, and altering the petrophysical properties of the tight sandstone reservoir. The densification process controlled the wettability and capillary pressure of pores in the tight sandstone. Specifically, the high kaolinite cement raised the hydrophilia, while the ubiquitous densification increased the capillary pressure of pores.