Source rocks in the first (J1s1) and second (J1s2) members of the Lower Jurassic Sangonghe Formation (J1s) in the Taibei Sag, Turpan-Hami Basin, NW China, are shore-shallow lacustrine mudstone and semi-deep to deep lacustrine mudstone. These two sets of mudstones provide an excellent opportunity for investigating the origin and expulsion patterns of hydrocarbon from source rocks under different environments. Through systematic geochemical analysis, including total organic carbon (TOC), Rock-Eval analysis, GC-MS analysis, and major and trace element analysis, the geochemical characteristics and sedimentary environment of the Sangonghe Formation (J1s) source rocks were evaluated. By integrating kerogen kinetics modeling, a more precise assessment of the hydrocarbon generation and expulsion characteristics of the source rocks from both members of the Sangonghe Formation is achieved. The fine-grained sediments of the Sangonghe Formation were formed in a weakly oxidized brackish water body. The J1s1 mudstone was deposited in a shore-shallow lacustrine environment. The repeated river influx increased the input of terrestrial higher plants, which complicated the maceral composition and diluted the abundance of organic matter. The J1s2 source rocks were formed in the semi-deep to deep lacustrine environment during the maximum transgression period with a large thickness and high TOC values, the maceral composition was dominated by a mixed source of aquatic organisms and terrestrial plants. Consequently, the source rocks of J1s2 exhibit higher initial hydrogen index (HI0), hydrocarbon generation potential (Qg) and transformation ratio (Tr) compared to those of the J1s1 source rocks, while the interbedded mudstone with limited thickness in J1s1 exhibits a higher hydrocarbon expulsion efficiency (Re).