Lacustrine mudstones are usually considered as deposited dominantly through vertical suspension fallout in low-energy environments influenced by only occasional fine-grained turbulent flows, while the deposition of their marine counterpart have been increasingly documented to be subject to more complex and dynamic processes. To provide insights into the dynamic processes that transport and deposit mud in lacustrine settings, this study presents an integrated petrographic, sedimentological, geochemical, and sequence-stratigraphic analysis of an ancient lacustrine mudstone-dominated succession using outcrops of the Lucaogou Formation in the Junggar Basin. Detailed facies characterization has revealed seven facies associations, which show spatial and temporal variations within a stratigraphic framework and stack to form eight repetitive parasequence styles. Process-based sedimentological analysis allows the identification of multiple transport mechanisms in different depositional settings, which strongly suggests that mud in lake systems is commonly subject to multiple dynamic transport processes (i.e., sediment plumes, turbidity flows, hyperpycnal flows, and wind-driven bottom currents), rather than suspension fallout under overall quiet conditions. The differences in the expression of parasequence styles can be attributed to the combination of allogenic and autogenic processes, which systematically change with distances from the shoreline. It is important to note that river-floods can discharge large amounts of mud into the deep lake setting. The strong correlation between geochemical data and the distribution of facies generated by riverine processes indicates that in saltwater lakes terrigenous mud is mainly transported to the deep water by sediment plumes and turbidity flows, whereas in freshwater lakes it is transported primarily by hyperpycnal flows. This study demonstrates that the transport and depositional processes of lake mud are diverse and vary systematically in response to lake conditions and environmental changes. High-resolution petrographic and sedimentologic analysis is essential to identify these dynamic processes, which allows more critical and accurate interpretations of depositional conditions and long-term depositional trends in lake systems.