The coupling relationship between volcanic-hydrothermal activities and hydrocarbon generation has been a common understanding in recent years. However, there is a lack of theoretical and practical guidance in the application hydrocarbon production. The fine-grained sedimentary rocks of the middle Permian Lucaogou Formation in the Jimsar Sag in the Junggar Basin, NW China, are critical source rocks and have been simplify regarded as a mudrocks for target for tight oil exploration. Recently studies show that rocks were deposited in an intracontinental lacustrine environment with multiple volcanic-hydrothermal activities. Their complex micro-scale lithological characteristics restrict the understanding and further exploration and development of tight oil. Hence, this study focuses on the detailed lithological and their organic geochemical characteristics of the Lucaogou Formation using microscopic thin-section observation, scanning electron microscopy, X-ray diffraction, Rock-Eval, saturated hydrocarbon chromatography and mass spectrometry. The following key conclusions were obtained. First, the massive mudrocks are sub-divided into lithofacies for hydrocarbon generation, including tuffaceous shale, calcareous shale and dolomitic shale, and, microinterval reservoirs, including dolostone and sedimentary tuff. Second, the origins of organic matter in Lucaogou Formation were mainly plankton, bacteria with minor of land plants. The depositional environment is high salinity and anoxic conditions. Materials derived from volcanic-hydrothermal activities, lacustrine precipitation, and terrestrial transportation mixed with various proportions to form this formation. Third, a mixture of carbonate minerals, felsic minerals and clay minerals is the best source rock, and the higher the mixture, the better. This research not only provides insight into the influence of volcanic-hydrothermal activities on lithology and organic matter enrichment, but also providing a potential scheme for the tight oil exploration and development in similar rifted geological settings. • A mixture lithology of carbonate minerals, felsic minerals and clay minerals is the best source rock. • The better the mixture of carbonate minerals, feldspar minerals and clay minerals, the better the quality of hydrocarbon source rock. • Volcanic-hydrothermal activities are favorable to the enrichment and preservation of organic matter. • The Lucaogou formation was formed in a high salinity and anoxic condition, and the biological source was mainly plankton.