The geological conditions and processes of fine-grained gravity flow sedimentation in continental lacustrine basins in China are analyzed to construct the model of fine-grained gravity flow sedimentation in lacustrine basin, reveal the development laws of fine-grained deposits and source-reservoir, and identify the sweet sections of shale oil. The results show that fine-grained gravity flow is one of the important sedimentary processes in deep lake environment, and it can transport fine-grained clasts and organic matter in shallow water to deep lake, forming sweet sections and high-quality source rocks of shale oil. Fine-grained gravity flow deposits in deep waters of lacustrine basins in China are mainly fine-grained high-density flow, fine-grained turbidity flow (including surge-like turbidity flow and fine-grained hyperpycnal flow), fine-grained viscous flow (including fine-grained debris flow and mud flow), and fine-grained transitional flow deposits. The distribution of fine-grained gravity flow deposits in the warm and humid unbalanced lacustrine basins are controlled by lake-level fluctuation, flooding events, and lakebed paleogeomorphology. During the lake-level rise, fine-grained hyperpycnal flow caused by flooding formed fine-grained channel–levee–lobe system in the flat area of the deep lake. During the lake-level fall, the sublacustrine fan system represented by unconfined channel was developed in the flexural slope breaks and sedimentary slopes of depressed lacustrine basins, and in the steep slopes of faulted lacustrine basins; the sublacustrine fan system with confined or unconfined channel was developed on the gentle slopes and in axial direction of faulted lacustrine basins, with fine-grained gravity flow deposits possibly existing in the lower fan. Within the fourth-order sequences, transgression might lead to organic-rich shale and fine-grained hyperpycnal flow deposits, while regression might cause fine-grained high-density flow, surge-like turbidity flow, fine-grained debris flow, mud flow, and fine-grained transitional flow deposits. Since the Permian, in the shale strata of lacustrine basins in China, multiple transgression-regression cycles of fourth-order sequences have formed multiple source-reservoir assemblages. Diverse fine-grained gravity flow sedimentation processes have created sweet sections of thin siltstone consisting of fine-grained high-density flow, fine-grained hyperpycnal flow and surge-like turbidity flow deposits, sweet sections with interbeds of mudstone and siltstone formed by fine-grained transitional flows, and sweet sections of shale containing silty and muddy clasts and with horizontal bedding formed by fine-grained debris flow and mud flow. The model of fine-grained gravity flow sedimentation in lacustrine basin is significant for the scientific evaluation of sweet shale oil reservoir and organic-rich source rock.