Abstract: [Objective]As a pivotal hydrocarbon-rich depression within the Junggar Basin, the Mahu Sag hosts the Permian Fengcheng Formation, a primary source rock interval widely regarded as a key “sweet spot” target for shale oil exploration. In contrast to the well-studied depocenter and northern slope of the Mahu Sag, the Southern Mahu area represents a marginal lacustrine facies belt. Although possessing distinct source rock quality, organic matter (OM) occurrence, and paleo-environmental evolution, the underlying genetic mechanisms remain poorly constrained.[Methods]To address this, this study integrates organic petrology, molecular geochemistry, and stable carbon isotope analyses on 33 mudstone and shale samples from 12 wells in the Southern Mahu area. Systematic tests were conducted, including total organic carbon (TOC) and total sulfur (TS) content, Rock-Eval pyrolysis, vitrinite reflectance (R_o), chloroform bitumen “A” extraction, gas chromatography-mass spectrometry (GC–MS) of saturated and aromatic hydrocarbons, and carbon isotope composition of extracts and fractions, to comprehensively evaluate geochemical characteristics and hydrocarbon generation potential. [Results]The results indicate that the OM abundance of the Fengcheng Formation source rocks in the Southern Mahu area generally reaches “good” to “excellent” levels. However, affected by the dilution of terrigenous detritus and transport effects, the OM is predominantly mixed Type II–III kerogen, presenting a significant contrast to the typical Type I–II OM found in the Northern Mahu area. The samples are generally within the peak oil-generation window (R_o＞0.8%).[Conclusion] After rigorously assessing and calibrating the thermal maturity effects on source-related parameters (e.g., Pr/Ph, β-carotane, and ETR), multi-proxy analysis confirms that the OM mainly originates from lower aquatic organisms such as algae and bacteria, with limited input from terrigenous higher plants. Regarding the depositional environment, the study area primarily evolved in a saline lacustrine slope setting, characterized by the dual control of endogenous chemical precipitation and exogenous terrigenous detrital input. The water column exhibited weak reducing and high-salinity conditions. This study elucidates the material basis of the Fengcheng Formation source rocks as a “saline mixed sedimentary” shale oil enrichment zone in the marginal facies, reveals the depositional heterogeneity compared to the sag center and northern slope, and provides a theoretical foundation for expanding shale oil exploration in the Junggar Basin.